Document:

ex10-5.htm

ADDENDUM TO EMPLOYMENT AGREEMENT

THIS ADDENDUM TO EMPLOYMENT AGREEMENT (this “Addendum”) is entered into effective as of January 1, 2015, by and between Stewart Information Services Corp. (the “Company”), and Jason Nadeau (the “Executive”).

W I T N E S S E T H:

WHEREAS, the Executive is currently employed with the Company and previously entered into an Employment Agreement with the Company dated as of January 1, 2012 (the “Agreement”); and

 

WHEREAS, the Executive and the Company have agreed to amend the Agreement to provide for a change in the definition of terms and conditions regarding the Executive’s entitlement of certain payments, including annual salary, severance payments, Long Term Incentive Plan and Short Term Incentive Plan, as such terms are specified and defined in the Employment Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Addendum and other good and valuable consideration, the Executive and the Company, intending to be legally bound, hereby agree as follows:

 

1. Section 2.2.1 Amendment.  The Executive and the Company hereby amend the Agreement by deleting Section 2.2.1 in its entirety and replacing it with the following:

 

2.2.1           Short Term Incentives.  The Executive shall be eligible to receive an annual short term incentive cash payment, the incentive plan to be determined by the Board in its sole discretion.  The terms of the short term incentive plan (“STI Plan”) are set out in Exhibit A hereto, which is incorporated herein for all purposes.  The terms and conditions of the STI Plan are subject to change from year to year.  The payment made pursuant to this Section 2.2.1 shall be paid to the Executive in the succeeding year for which it is earned and shall be paid by March 31 of such year.  The Executive must be actually employed on the date that any short term incentive plan payment is made in order to be eligible and entitled to any such short term incentive plan payment, except as otherwise set forth in this Agreement.

 

2. Section 2.2.2 Amendment.  The Executive and the Company hereby amend the Agreement by deleting Section 2.2.2 in its entirety and replacing it with the following:

 

2.2.2  Long Term Incentives.  The Executive shall be eligible to participate in the Company’s Long Term Incentive Plan (“LTI Plan”), as such plan shall be in effect and amended and/or superseded from time to time.  The Company reserves the right to terminate the LTI Plan in its sole discretion in accordance with the terms of the LTI Plan, and the terms and conditions of the Plan are subject to change from year to year.  The terms of the LTI Plan are set out in Exhibit B hereto, which is incorporated herein for all purposes.  The Executive must be actually employed on the date that any long term incentive plan payment is made in order to be eligible and entitled to any such long term incentive plan payment.

 

  

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3. Section 4.5.1(B) Amendment.  The Executive and the Company hereby amend the Agreement by deleting Section 4.5.1(B) in its entirety and replacing it with the following:

 

(B)           An amount equal to:

 

(1)           In the event such termination occurs at any time other than a Change of Control Period, twelve (12) of the Executive’s then current salary, payable in semi-monthly installments, beginning on the sixtieth day after the Date of Termination; severance payment shall be made in accordance with the Company’s payroll practices (with a lump sum payment due to the Executive of any remaining severance amounts containing the complete remainder of all severance due to the Executive within thirty days of the end of the Restricted Period); or

 

(2)           In the event such termination occurs during or at the end of a Change of Control Period, twenty-four (24) months of the Executive’s then current salary, payable in semi-monthly installments, beginning on the sixtieth day after the Date of Termination; severance payment shall be made in accordance with the Company’s payroll practices (with a lump sum payment due to the Executive of any remaining severance amounts containing the complete remainder of all severance due to the Executive within thirty days of the end of the Restricted Period).

 

4. Section 4.8 Amendment.  The Executive and the Company hereby amend the Agreement by adding the following to the end of Section 4.8:

 

For purposes hereof, (A) “Change of Control Effective Date” shall mean the first date during the Term on which a Change of Control of the Company occurs; provided that, anything in this Agreement to the contrary notwithstanding, if a Change of Control of the Company occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control of the Company occurs, and if it is demonstrated by the Executive that such termination of employment (1) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control of the Company or (2) otherwise arose in connection with or anticipation of a Change of Control of the Company, then for all purposes of this Agreement the “Change of Control Effective Date” shall mean the date immediately prior to the date of such termination of employment; and (B) “Change of Control Period” shall mean the greater of (i) the period commencing on the Change of Control Effective Date and ending on the Date of Termination in effect on the Change of Control Effective Date, and (ii) the period commencing on the Change of Control Effective Date and ending on the second anniversary of the Change of Control Effective Date.

 

5. Term of Addendum.  The Company and the Executive agree that the term of this Addendum shall commence on January 1, 2015.

 

  

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6. Entire Addendum.  This Addendum contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto.

 

7. Waivers and Amendments.  This Addendum may be amended, superseded, canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written instrument signed by the parties or, in the case of a waiver, by the party waiving compliance.  No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any waiver on the part of any party of any such right, power or privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder, preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder.

 

8. Governing Law.  This Addendum shall be governed by and construed in accordance with the laws of the State of Texas (without giving effect to the choice of law provisions thereof).

 

9. Assignment.  This Addendum, and any rights and obligations hereunder, may not be assigned by the Executive and may be assigned by the Company only to a successor by merger or purchasers of substantially all of the assets of the Company or its affiliates.

 

10. Counterparts.  This Addendum may be executed in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

11. Headings.  The headings in this Addendum are for reference purposes only and shall not in any way affect the meaning or interpretation of this Addendum.

 

12. No Presumption Against Interest.  This Addendum has been negotiated, drafted, edited and reviewed by the respective parties, and therefore, no provision arising directly or indirectly here from shall be construed against any party as being drafted by said party.

 

13. Binding Agreement.  This Addendum shall inure to the benefit of and be binding upon the Company and its respective successors and assigns and the Executive and the Executive’s legal representatives.

 

  

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IN WITNESS WHEREOF, the parties have executed this Addendum as of the date first above written.

 

EXECUTIVE

/s/ Jason R. Nadeau

Name:  Jason Nadeau

Title:    Group President, Mortgage and Title Services

 

Date:   4/6/15

COMPANY

Stewart Information Services Corp.

By:  /s/ Matthew M. Morris

Name:  Matthew W. Morris

Title:    Chief Executive Officer

Date:   4/6/15

  

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EXHIBIT A

ANNUAL SHORT TERM INCENTIVE PLAN

(“STI PLAN”)

Executive shall be eligible to participate in the Company’s Annual Bonus Payment Program, also known as the Short Term Incentive Plan (“STI Plan”).  The STI Plan shall be determined by the Board of Directors (“Board”), in its sole discretion. Payout amount will be determined by the attainment towards metrics which are both specific to your position as well as reflective of corporate performance.

As part of its analysis, the Board will consider the following targets in determining the amount of the Short Term Incentive (“STI”) payment to the Executive:

 

STI will be delivered as a cash bonus, paid annually after the conclusion of the fiscal year, before the end of the first quarter of the succeeding year.  STI payout is expressed as a percentage of your base pay.

Threshold Annual STI payout is the equivalent of 50% of your target payout.

Target Annual STI payout is the equivalent of 100% of your target payout, which is 100% of your base pay.

Maximum Annual STI payout is the equivalent of 200% of your target payout.

  

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Specific terms and calculations related to the Short Term Incentive Plan

The following sets forth the definition of specific terms and calculations related to the STI Plan.

	
Term/Calculation

	
Definition

	
Base Pay

	
This is the annual base salary.

	
Budget Attainment

	
Budget Attainment metric measures the variance between actual expenses and budget expenses for service center executives.  The variance is expressed as a percent variance.  The metric is calculated by taking the actual annual expenses minus the budgeted annual expenses.  The difference is then divided by the budgeted annual expenses.  Payout for this metric is based on variance percentage.

	
Company

	
The Company is Stewart Information Services Corporation and its subsidiaries.

	
Corporate

	
Corporate is the same as Company.

	
Corporate Performance

	
Corporate Performance is the set of metrics for the Company.

	
Earnings Before Interest, Taxes, Depreciation and Amortization 

(EBITDA)

	
EBITDA metric is calculated by adding back interest expense, depreciation expense and amortization expense to pretax earnings. The source of data is the System of Record.  Payout for this metric is based on percent improvement.

	
Investment and Other Gains (Losses) – Net

	
Investment and Other Gains (Losses) – Net is a line item on the Company’s Consolidated Statement of Operations, Retained Earnings and Comprehensive Earnings that includes, but not limited to, realized earnings (losses) from the sale of various types of financial and non-financial instruments; sale of subsidiaries, equity basis investments, and cost-basis investments; impairment of equity and cost-basis investments; and other types of non-operating transactions.  The source of data is the System of Record.

	
Investment Income

	
Investment Income is a line item on the Company’s Consolidated Statement of Operations, Retained Earnings and Comprehensive Earnings that includes, but not limited to, interest income, dividends, royalties and certain rental income less any fees incurred from investments.  The source of data is the System of Record.

	
Maximum (Performance Level)

	
See Performance Level.

	
Maximum Target Payout

	
The Maximum Target Payout is the maximum annual cash bonus that can be earned and paid under the STI Plan.  It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in the Executive Compensation Plan Summary.

  

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Modified Average Shareholders’ Equity

	
Modified Average Shareholders’ Equity is calculated by subtracting cumulative other comprehensive income and noncontrolling interest from shareholders’ equity.  This calculation is done as of the beginning of the year and the end of the year.  The average is then calculated by adding the beginning of the year and ending of the year calculations and then dividing by two.

	
Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization (Modified EBITDA Corporate Metric)

	
The Modified EBITDA metric is calculated by subtracting Investment and Other Gains (Losses) – Net as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from EBITDA.  The source of data is the System of Record.  Payout for this metric is based on percent attainment of targeted amount.

	
Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization (Modified EBITDA Personal Metric Direct 

Operations)

	
The Modified EBITDA metric is calculated by subtracting Investment Income and Investment and Other Gains (Losses) – Net, as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from EBITDA for Direct Operations.  The source of data is the System of Record.

	
Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization (Modified EBITDA Personal Metric 

International Operations)

	
The Modified EBITDA metric is calculated by subtracting Investment Income, Investment and Other Gains (Losses) – Net, Title Losses and Related Claims, Premium Taxes and other unique or unusual items including, but not limited to, certain claims exceeding $1.0 million as determined by the Board of Directors of the Company, from EBITDA.  The Modified EBITDA excludes Modified EBITDA reported by Stewart Title of Latin America and Stewart Title Guaranty de Mexico.  The source of data is the System of Record.

	
Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization (Modified EBITDA Personal Metric Mortgage 

Services)

	
The Modified EBITDA metric is calculated by subtracting Investment Income and Investment and Other Gains (Losses) – Net, as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from EBITDA for Mortgage Services.  The source of data is the System of Record as aggregated and summarized in the Variable Compensation Detail Report.

  

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Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization Margin (Modified EBITDA Margin Personal 

Metric Direct Operations)

	
Modified Earnings Before Interest, Taxes, Depreciation and Amortization Margin metric is calculated by dividing Modified Earnings Before Interest, Taxes, Depreciation and Amortization (Modified EBITDA Direct Operations) by Modified Operating Revenues. The source of data is the System of Record.  Payout for this metric is based on ratio attainment.

	
Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization Margin (Modified EBITDA Margin Personal 

Metric International Operations)

	
Modified Earnings Before Interest, Taxes, Depreciation and Amortization Margin metric is calculated by dividing Modified Earnings Before Interest, Taxes, Depreciation and Amortization (Modified EBITDA International Operations) by Modified Operating Revenues. The source of data is the System of Record.  Payout for this metric is based on ratio attainment.

	
Modified Earnings Before Interest, Taxes, Depreciation and 

Amortization Margin (Modified EBITDA Margin Personal 

Metric Mortgage Services)

	
Modified Earnings Before Interest, Taxes, Depreciation and Amortization Margin metric is calculated by dividing Modified Earnings Before Interest, Taxes, Depreciation and Amortization (Modified EBITDA Mortgage Services) by Modified Operating Revenues. The source of data is the System of Record as aggregated and summarized in the Variable Compensation Detail Report.  Payout for this metric is based on ratio attainment.

	
Modified Gross Revenues (Corporate Metric)

	
Modified Gross Revenues is calculated by subtracting Investment and Other Gains (Losses) – Net, as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from Total Revenues. Payout for this metric is based on percent improvement.

	
Modified Operating Revenues (Personal Metric)

	
Modified Operating Revenues Improvement is calculated by subtracting the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from Operating Revenues. The Company’s portion of earnings from equity investees is included in the calculation.  Payout for this metric is based on percent improvement from the full fiscal year immediately following the effective date of this amendment compared to the fiscal year of this amendment.

	
Modified Pretax Profits (Corporate Metric)

	
Modified Pretax Profits is calculated by subtracting Investment and Other Gains (Losses) – Net, as well as removing the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company from pretax profits. The source of data is the System of Record.

  

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Modified Pretax Margin (Corporate Metric)

	
The Modified Pretax Margin (Corporate Metric) is calculated by dividing Modified Pretax Profits (Corporate Metric) by Modified Gross Revenues (Corporate Metric). The source of data is the System of Record.  Payout for this metric is based on ratio attainment.

	
Modified Pretax Margin (Personal Metric)

	
The Modified Pretax Margin personal metric is calculated by dividing Modified Pretax Profits by Modified Operating Revenues. The source of data is the System of Record.  Payout for this metric is based on ratio attainment.

	
Modified Net Earnings Attributable to Company

	
Modified Net Earnings Attributable to Company is calculated by subtracting Investment Income and Investment and Other Gains (Losses) – Net, as well as the effects of non-recurring, unusual and/or extraordinary items as determined by the Board of Directors of the Company of the Company from Net Earnings Attributable to Company.  The source of data is the System of Record.

	
Modified Return on Equity (Modified ROE)

	
Modified Return on Equity metric is calculated by dividing Modified Net Earnings Attributable to Company by Modified Average Shareholders’ Equity.  The source of data is the System of Record.  Payout for this metric is based on ratio attainment.

	
Operating Revenues

	
Operating Revenues is calculated by deducting Investment Income and Investment and Other Gains (Losses) – Net from total gross revenues.  The Company’s portion of earnings from equity investees is included in the calculation.

	
Operating Revenues (Personal Metrics Agency Operations)

 

	
Operating Revenues is Line 20 Total Revenues from the Profit Center Statement (STG portion) and Line 20 Total Net Revenues from the Schedule A (STC portion). As a result, the System of Record is the PCSAPP and STATAPP.

	
Operating Revenues Local Currency (Personal Metric 

International Operations)

 

	
The source of data for local currency is from International Operations accounting and reporting systems.

	
Operational Performance

	
Operational Performance is the set of metrics for an executives’ area of management.

	
Performance Level

	
Performance Level represents the range of possible payout depending on performance driver for each metric.  The payout range is defined as the Threshold, Target, and Maximum.

	
Pretax Profit (Corporate Metric)

	
Pretax Profit for the corporate metric is equivalent to earnings before taxes and noncontrolling interests as reported in the Form 10-K.

  

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Pretax Profit (Personal Metric Agency Operations)

	
Pretax Profit for the personal metric is the pretax earnings reported on line 71 of the Profit Center Statements (STG portion) and Schedule A (STC portion). As a result, the System of Record is the PCSAPP and STATAPP.

	
Project Attainment

	
Project Attainment metric is specific goals established for an executive.  This metric is measured by determining how much of the annual goals were completed on a percentage basis.  Payout for this metric is based on completion percentage.

	
System of Record

	
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated.

	
Target (Performance Level)

	
See Performance Level.

	
Target Payout

	
Target Payout is the annual cash bonus that can be earned and paid under the STI Plan.  Target Payout is calculated by multiplying Base Pay by an agreed upon percentage as indicated in the Executive Compensation Plan Summary.

	
Threshold (Performance Level)

	
See Performance Level.

	
Total Revenues

	
Total Revenues is equivalent to total revenues as reported in the Form 10-K.

	
Variable Compensation Detail Report

	
This is a report generated from the variable compensation tracking tool and is used to calculate the variable compensation metrics.

	
Weighting

	
Weighting is a calculation that applies a percentage to each metric.  The aggregation of the percentages is 100%.

  

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EXHIBIT B

LONG TERM INCENTIVE PLAN

(“LTI”)

Executive shall be eligible to participate in the Company’s Long Term Incentive Plan (“LTI Plan”), as such plan shall be in effect and amended and/or superseded from time to time.

The actual value of the LTI Plan shall be determined by the Board of Directors (“Board”), in its sole discretion.  The Board shall consider the overall performance of the Company in awarding the any Long Term Incentive (“LTI”).  As part of its analysis, the Board will consider the following targets in determining the value of the LTI payable to the Executive:

 

Target LTI grant is the equivalent of 100% of your base pay.

LTI will be delivered as a Restricted Stock Award (RSA) or as a Performance Stock Award (PSA) (Total = 100% of LTI grant).

LTI will be granted annually.  It is 100% granted, but vests depending on the terms listed in this exhibit.

Dividend Equivalent Rights (“DER”):

In the event a dividend is paid to shareholders during the restriction period, the recipient will receive a cash payout as a DER at the time of vesting based on the number of shares from this restricted period which become vested due to meeting the performance and time restrictions.

  

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Time-Vested Restricted Shares

Award Value:

	
·  

	
One-third of the total targeted annual grant value will be provided in time-based RSA’s.

	
·  

	
The grant value will be determined by calculating the total equity grant value [(2015 base salary x LTI target as % of 2015 base salary) then dividing by three].

	
·  

	
Share count is based on the grant value divided by grant date closing stock price on 12/31/2014.

Vesting:

	
·  

	
RSA’s will cliff vest three years from date of grant.

	
·  

	
These shares are not subject to performance contingencies and will be earned by the recipient by continued employment through the vesting period.

Performance Shares -Total Shareholder Return (“TSR”)

Award Value:

	
·  

	
The TSR-based performance shares will constitute one third of the overall long-term incentive grant value.

	
·  

	
The target number of shares granted will be equal to the number of time-based restricted shares.

Vesting:

	
·  

	
Vesting of performance shares occurs at the end of the three year performance period based on the achievement of pre-determined TSR percentile ranking in relation to the Russell 2000 Financial Services Index Companies (“Comparative Group”).

Performance Period:

	
·  

	
The three year period which covers the grant date to the three year anniversary of the grant date.

Performance Metric:

	
·  

	
The performance metrics associated with the Performance Shares will function on a relative TSR-based model provided on the following page.  Actual relative TSR performance will be measured at the end of the three-year period as compared to the Russell 2000 Financial Services Index.

Performance Range:

	
·  

	
As set out in the table below, threshold and maximum opportunity to incentivize performance will be associated with varying levels of relative performance.  Targeted performance is achieved when SISCO TSR is at the 60th percentile of the comparative group.  Threshold performance is set at the 40th percentile.  In the event SISCO performance is below the 40th percentile, the associated payout is equal to zero.  Maximum payout is achieved when SISCO TSR performance is at the 100th percentile of the comparative group.

  

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Performance Shares - Earnings per Share (“EPS”) Growth

Award Value:

	
·  

	
The EPS-based performance shares will constitute one third of the overall long-term incentive grant value.

	
·  

	
The target number of shares to grant will be equal to the number of time-based RSA’s

Vesting:

	
·  

	
Vesting of EPS performance shares occurs at the end of the three-year performance period based on achievement of pre-determined EPS targets.

Performance Period:

	
·  

	
The three year period which covers the grant date to the three year anniversary of the grant date.

Performance Metric:

	
·  

	
EPS performance shares will function on an EPS Compounded Annual Growth Rate performance scale.

Performance Range:

	
·  

	
As set out in the table below, threshold and maximum opportunity to incentivize performance will be associated with varying levels of EPS achievement.  Targeted performance is achieved when SISCO’s EPS Compounded Annual Growth Rate is equal to 10%.  A threshold performance level has been established at 5% growth.  In the event SISCO performance is below this level, the associated payout is equal to zero.  Maximum payout is achieved when SISCO EPS performance is equal to or greater than 15% growth.

  

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Specific terms and calculations related to the Long Term Incentive Plan

The following sets forth the definition of specific terms and calculations related to the LTI Plan.

	
Term/Calculation

	
Definition

	
Base Pay

	
This is the annual base salary.

	
Company

	
The Company is Stewart Information Services Corporation and its subsidiaries.

	
Circuit Breaker

	
Circuit Breaker is the minimum corporate performance that must be achieved in order to receive the specified compensation.

	
Earnings Before Interest, Taxes, Depreciation and Amortization 

(EBITDA)

	
EBITDA metric is calculated by adding back interest expense, depreciation expense and amortization expense to pretax earnings. The source of data is the System of Record.

	
Earnings Per Share (EPS)

	
Earnings Per Share (EPS) is the Diluted EPS attributable to Stewart as reported annually in the Form 10-K.  It is calculated by dividing net earnings attributable to Stewart by the dilutive average shares outstanding.  The Annual Report Form 10-K is the system of record.

	
Maximum (Performance Level)

	
See Performance Level.

	
Maximum Target Payout

	
The Maximum Target Payout is the maximum annual cash bonus that can be earned and paid under the LTI Plan.  It is calculated by multiplying the Target Payout by an agreed upon percentage as indicated in the Executive Compensation Plan Summary.

	
Performance Goals

	
Performance Goals provide the threshold, target and maximum measurements that must be achieved in order to receive the related level of compensation.

  

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Performance Level

	
Performance Level represents the range of possible payout depending on performance driver for each metric.  The payout range is defined as the Threshold, Target and Maximum.

	
Performance Share Award (PSA)

	
Performance Share Award is share-based compensation that vests based on defined measures, which include corporate performance and time based measures.

	
Restricted Stock Award (RSA)

	
Restricted Stock Award is share-based compensation that is restricted by time of service and corporate performance.

	
System of Record

	
Hyperion Financial Management (HFM) is the system of record for all financial data unless otherwise stated.

	
Target (Performance Level)

	
See Performance Level.

	
Threshold (Performance Level)

	
See Performance Level.

	
Total Shareholder Return (TSR)

	
Total Shareholder Return is calculated by taking the difference between the Company’s end of year price per share and the beginning of year price per share and adding the Company dividend per share.  Next, divide that sum by the Company’s beginning of year price per share.

	
Total Shareholder Return (TSR) Ranking

	
Total Shareholder Return Ranking is determined by calculating the Company’s percentile ranking for Total Shareholder Return relative to the Russell 2000 Financial Services Index.  The source of data is Bloomberg, which is provided by Vaughn Nelson, the Company’s investment portfolio manager.

 

Page 15Exhibit 10.1 - Separation letter agreement between Triumph Group, Inc. and Jeffry D. Frisby dated April 7, 2015

Exhibit 10.1
EXECUTION VERSION

April 7, 2015
Jeffry D. Frisby
c/o Triumph Group, Inc.
899 Cassatt Road, Suite 210
Berwyn, Pennsylvania 19312
Dear Jeff:
This letter (this “Agreement”) outlines and confirms our agreement of the terms and conditions that will apply relative to the separation of your employment with Triumph Group, Inc. (the "Company").
1.Separation Date:  Your employment with the Company will cease as of April 7, 2015 (the "Separation Date").  Effective as of the Separation Date, you hereby resign from your position as a member of the Board of Directors of the Company, from your employment with, and position as President and Chief Executive Officer of, the Company and from all positions you hold as an employee, director or officer of any affiliates of the Company, and you hereby relinquish any power of attorney and signing authority that you may hold on behalf of the Company or any of its affiliates.  
2.Severance Payments:  The Company shall pay you cash severance in the form of continuation of your base salary from the Separation Date through the second anniversary thereof, at the annual rate in effect as of the Separation Date (the “Severance Payments”).  Subject to paragraph 16 of this Agreement and contingent upon the expiration of seven (7) days following your execution of this Agreement (assuming you have not revoked this Agreement within that period) and your continued compliance with the terms of this Agreement, your Severance Payments will be paid  in equal installments over such two-year period, on a schedule consistent with the Company’s payroll practices as of the Separation Date, less withholding and other customary payroll deductions. Notwithstanding the foregoing or any other provisions hereof, you shall forfeit your right to any further Severance Payments upon a material breach by you of any provision of this Agreement. You agree that the Severance Payments are in addition to any other benefits and payments to which you are otherwise legally entitled.
3.Timely Payment of All Final Wages:  You acknowledge and agree that as of your execution of this Agreement, you have received payment of all wages, compensations and benefits owed to you pursuant to your employment with the Company other than (a) as set forth herein and (b) the benefits owed to you pursuant to the supplemental executive retirement plan and split dollar life insurance program maintained by the Company in which you participate, which benefits shall be provided to you in accordance with the terms of such plan and program.  You further agree the Company is not indebted to you in any amount or for any reason.  
4.Vacation:  In accordance with the Company’s existing vacation policy, you will be paid for vacation earned as of your Separation Date but which has not yet been taken.  Your vacation pay entitlement will be forwarded to you in accordance with the Company’s standard procedures.
5.COBRA:  You and your eligible dependents will continue to be covered under the Company’s health insurance plan if you elect COBRA coverage after the expiration of your coverage under the Company’s medical and dental plans in accordance with paragraph 6.  You will be notified of your COBRA rights in due course by the Company.

6.Other Insurance:  Medical and dental insurance will continue under the Company’s plans until September 30, 2015, subject to your continued payment of premiums at the active employee rate; all other insurances, other than the insurances expressly provided for in this Agreement, will cease to be effective on your Separation Date.
7.Triumph Group, Inc. 401(K) Plan:  You are entitled to the applicable choices outlined in the plan prospectus or its supplements in regard to your account under the Triumph Group, Inc. 401(K) Plan.  Your contributions under the Triumph Group, Inc. 401(K) Plan will cease as of your Separation Date. 
8.Fiscal Year 2013 Incentive Award:  The Company hereby confirms that (a) your termination of employment will be treated as a retirement for purposes of the fiscal year 2013 incentive award previously granted to you pursuant to the Triumph Group, Inc. Executive Incentive Plan (the “EIP”) and the Triumph Group, Inc. 2004 Stock Incentive Plan and (b) the amount of your fiscal year 2013 incentive award will be subject to reduction only in accordance with the terms of Sections 3.2 and 6.2 of the EIP in the event that the compensation and management development committee of the Company’s board of directors determines that a level of Threshold Performance (as defined in the EIP) is not attained over the Award Period (as defined in the EIP) and, for the avoidance of doubt, any such reduction would apply in a uniform manner to the fiscal year 2013 incentive awards held by other senior executives of the Company.
9.Company Property:  You agree to return all Company property and equipment, including but not limited to keys, badges, manuals, credit cards, engineering stamps, Company or customer data or documents (electronic or paper and including all copies), laptops, phones, pagers, parking passes and any other property belonging to the Company and its affiliates.
10.Cooperation:  You agree to make yourself available, attend meetings, give testimony, and otherwise cooperate as reasonably requested by the Company regarding any litigation, arbitration, administrative proceedings, investigations or other matters of a similar nature involving the Company of which you had knowledge or are alleged to have had knowledge.  Any address changes should be communicated promptly to Company headquarters.  The Company shall provide reimbursement for reasonable expenses associated with this provision.
11.Employee’s Release, Waiver and Agreement:  You understand and acknowledge that the benefits contained in this Agreement exceed the benefits to which you would otherwise be entitled upon termination of your employment.  In consideration for the additional benefits extended to you in this Agreement, and intending to be legally bound:
(a)You agree to RELEASE AND HOLD HARMLESS FOREVER, the Company, its subsidiaries and affiliates and their respective officers and employees from any and all causes of action, known or unknown, arising out of or relating to your association and/or employment with or termination from the Company, which may have existed prior to or contemporaneously with the execution of this Agreement, including but not limited to the following:  constructive discharge, negligence, breach of contract, breach of express or implied covenant, defamation, libel, slander, intentional or negligent infliction of emotional distress, tortious interference with contract, retaliation, wrongful discharge, failure to pay wages, bonuses, commissions or other benefits, attorneys’ fees, or any other contract or tort claims, Title VII of Federal Civil Rights Act of 1964 (Title VII), Fair Labor Standards Act (FLSA), Americans With Disabilities Act (ADA), Employee Retirement Income Security Act (ERISA), Equal Pay Act (EPA), Rehabilitation Act, Family and Medical Leave Act (FMLA), National Labor Relations Act (NLRA), Labor Management Relations Act (LMRA), Worker Adjustment and Retraining Notification Act (WARN), Age Discrimination 

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in Employment Act (ADEA), Older Workers Benefit Protection Act of 1990 (OWBPA), or any other action under any federal, state or local statute, as amended, or regulation or other common law.  Notwithstanding the foregoing, the release set forth in this paragraph 11(a) does not apply to any claim relating to directors’ and officers’ liability insurance  coverage or any right of indemnification (including expense reimbursement) under the Company’s organization documents or otherwise to which you are entitled.
(b)Notwithstanding the foregoing, you understand and agree this Agreement does not impair your right to file a charge or complaint with or participate in any investigation or proceeding conducted by any federal, state, or local enforcement agency such as the EEOC; however, the consideration provided to you in this Agreement shall be the sole relief provided for the claims that are released and you will not be entitled to recover and you agree to waive any monetary benefits or recovery against the Company in connection with any such claim, charge or proceeding without regard to who has brought such complaint or charge.
(c)You understand and agree that nothing in the Agreement impairs your right to challenge the waiver of your ADEA claims as permitted by law.
(d)You agree to not disparage or otherwise comment negatively in any way upon the Company, its employees, its business practices, projects, clients or services, to any person, either orally or in writing, unless otherwise provided by law; however, the non-disparagement obligations under this paragraph do not interfere with or restrict your ability to communicate with any federal, state, or local agency, including any with which a charge has been filed.
(e)You agree you will not induce or encourage any employee of the Company to leave the employment of the Company or otherwise hire or solicit any such employee of the Company during the two-year period immediately following your Separation Date (the “Restricted Period”); provided, however, that you may hire or solicit any such employee who has not been employed by the Company for six months prior to such hiring or soliciting.
(f)You agree that you shall not at any time use, publish, disclose or authorize anyone else to use, publish or disclose any Confidential Information belonging or relating to the Company.  You agree to remain bound by any Company agreement or policy relating to confidential information, or similar matters to which you are now subject.  Confidential Information includes, but is not limited to models, drawings, blueprints, memoranda and other materials, documents or records of proprietary nature; information relating to research, manufacturing processes, bills of material, finance, accounting, sales, personnel management and operations; and information particularly relating to customer lists, price lists, customer service requirements, costs of providing service and equipment, pricing and equipment maintenance costs.  You further agree that you will not retain any copies or reproductions of correspondence, reports, drawings, photographs or documents containing Confidential Information or relating in any way to the business of the Company.
(g)You agree that, during the Restricted Period, you will not, directly or indirectly, for yourself or on behalf of any other person or by assisting others, (i) engage in any business which competes with the Company in the marketing area serviced by the Company and in which you were undertaking your duties and responsibilities for the Company during the twelve-month period immediately prior to your Separation Date or (ii) solicit or cause to solicit for the purpose diverting, taking away or disrupting, or of attempting to divert, take-away or disrupt, any of the Company’s prospective clients or clients with whom you had material contact during your employment with the Company for the purpose of providing products or services that are the same as or similar to those of the Company; provided, that it shall not be a violation of this paragraph 11(g) for you to serve as a non-executive member of the board of directors of any entity.  Notwithstanding the foregoing, you may take any of the actions specified in this paragraph 11(g) during the 

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portion of the Restricted Period beginning on the first anniversary of the Separation Date and ending on the last day of the Restricted Period, provided that (A) you give written notice to the Company at least five (5) business days in advance of any such action, describing such action in reasonable detail and (B) all Severance Payments that would otherwise be paid following your commencement of such action will be forfeited.  
(h)For purposes of this paragraph 11, references to the Company shall be deemed to include the Company and its affiliates, unless the context clearly indicates otherwise.
12.Company’s Release and Nondisparagement.  In consideration for the covenants provided by you pursuant to this Agreement, and intending to be legally bound, the Company hereby agrees:
(a) to RELEASE AND HOLD HARMLESS FOREVER, you and your heirs, successors and assigns from any and all causes of action, known or unknown, arising out of or relating to your association and/or employment with or termination from the Company, which may have existed prior to or contemporaneously with the execution of this Agreement; and
(b)that no member of the board of directors of the Company or senior executive officer of the Company will disparage or otherwise comment negatively in any way upon you to any person, either orally or in writing, unless otherwise provided by law; however, the non-disparagement obligations under this paragraph do not interfere with or restrict the ability of any such person to communicate with any federal, state, or local agency, including any with which a charge has been filed.
13.Medicare Lien Provision.  You represent that you are not Medicare eligible.  You further represent and agree that you have made no claim against the Company, nor could the Company be liable for, any medical expenses incurred by you before or after the execution of this Agreement.  Furthermore, you are aware of no medical expenses that Medicare has paid and for which the Company is or could be liable. You acknowledge and agree that, to the best of your knowledge, no liens of any governmental entities, including those for Medicare conditional payments, exist.  You will indemnify, defend, and hold the Company harmless from Medicare claims, liens, damages, conditional payments, and rights to payment, if any, including attorneys' fees, and you further agree to waive any and all future private causes of action for damages pursuant to 42 U.S.C. § 1395y(b)(3)(A) et seq.
14.Reformation and Severability; Remedies:  Should any of the above provisions, paragraphs or subparagraphs of this Agreement, or any part thereof, hereafter be construed to be unreasonable, invalid or unenforceable, you and the Company agree that the court may modify such terms to make them reasonable and enforceable.  The invalidity of any one provision shall not affect the validity of the remainder of the provisions, paragraphs or subparagraphs, which shall be given full effect without regard to the invalid portions.  Each provision, paragraph or subparagraph of this Agreement is severable from all others and constitutes a separate and distinct covenant.  You acknowledge and agree that: (a) the purpose of the covenants set forth in paragraphs 11(d), 11(e), 11(f), 11(g) and 11(h) (collectively, the “Restrictive Covenants”) is to protect the goodwill, trade secrets and other Confidential Information of the Company and its affiliates; (b) because of the nature of the business in which the Company is engaged and because of the nature of the Confidential Information to which you have had access, the Company would suffer irreparable harm and it would be impractical and excessively difficult to determine the actual damages of the Company in the event you breached any of the Restrictive Covenants; and (c) remedies at law (such as monetary damages) for any breach of your obligations under the Restrictive Covenants would be inadequate.  You therefore agree and consent that (i) if you commit any breach of any Restrictive Covenant during the applicable period of restriction specified herein, the Severance Payments that have not been paid, if any, will be immediately forfeited, and (ii) if you commit any breach of any Restrictive Covenant or threaten to commit any such 

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breach at any time, the Company shall have the right (in addition to, and not in lieu of, any other right that may be available to it) to temporary and permanent injunctive relief from a court of competent jurisdiction, without posting any bond or other security and without the necessity of proof of actual damage.  You acknowledge and understand that the Restrictive Covenants are in addition to, and not in substitution of, any similar covenants contained in any other agreements between you and the Company or in any Company policies applicable to you. 
15.Employee Acknowledgment:
You acknowledge and agree that the release of claims under the ADEA is subject to special waiver protections under 29 U.S.C. § 626(f).  In accordance with that section, you specifically agree that you are knowingly and voluntarily releasing and waiving any rights or claims of discrimination under the ADEA.  By signing this Agreement, you acknowledge that:
(a)    you have had at least 21 days to consider the terms of this Agreement and whether or not you should sign it, and if you should execute this Agreement prior to the expiration of the 21-day consideration period, you knowingly and voluntarily waive your right to consider this Agreement for 21 days;
(b)    the Company has advised you, and hereby advises you, in writing that you should consult with an attorney of your own choosing prior to signing this Agreement, and that you have consulted with, or have had sufficient opportunity to consult with, an attorney of your own choosing regarding the terms of this Agreement; 
(c)    you are waiving valuable legal rights and releasing the Company of all claims which may have existed prior to or contemporaneously with the execution of this Agreement, except for those obligations expressly stated in this Agreement, and that you are not waiving any claims that may arise after the date you sign this Agreement; 
(d)    you have not relied upon any representation or statement made by the Company or any employee or other person on behalf of the Company with regard to the subject matter, meaning or effect of this Agreement and that no statements made by the Company have in any way unduly coerced or influenced you to execute this Agreement; 
(e)    you have read this Agreement, that it has been written in a manner that is easy to understand, and that you  fully understand its terms;
(f)    except as provided in this Agreement, you have no right or claim, contractual or otherwise, to any or all of the benefits described in paragraph 2 of this Agreement; 
(g)    this Agreement does not reflect any admission by the Company of any liability or wrongdoing; and
(h)    you further understand and agree that even if you do sign this Agreement, you have the right to revoke it by delivering a notice of revocation in writing to me by mail, personal delivery, or facsimile within seven (7) calendar days of your signing the Agreement.  Because you have this right, this Agreement shall not become effective or enforceable until the eighth (8th) calendar days after it is signed by you and has not been revoked.    
16.Section 409A.  All amounts payable under this Agreement are intended to comply to the maximum extent possible with the "short term deferral" exception from Section 409A of the Internal Revenue Code 

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("Section 409A") specified in Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) or the "separation pay plan" exception specified in Treas. Reg. § 1.409A-1(b)(9) (or any successor provision), or both of them, and shall be interpreted in a manner consistent with the applicable exceptions. Notwithstanding the foregoing, to the extent that any amounts payable in accordance with this Agreement are subject to Section 409A, this Agreement shall be interpreted and administered in such a way as to comply with Section 409A to the maximum extent possible.  Each installment payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying Section 409A.  If payment of any amount subject to Section 409A is triggered by a separation from service that occurs while you are a "specified employee" (as defined by Section 409A), and if such amount is scheduled to be paid within six (6) months after such separation from service, the amount shall accrue without interest and shall be paid the first business day after the end of such six-month period, or, if earlier, within 15 days after the appointment of the personal representative or executor of your estate following your death.  "Termination of employment," "resignation" or words of similar import, as used in this Agreement shall mean, with respect to any payments subject to Section 409A, your "separation from service" as defined by Section 409A.  If any payment subject to Section 409A is contingent on the delivery of a release by you and could occur in either of two years, the payment will occur in the later year.  Nothing in this Agreement shall be construed as a guarantee of any particular tax treatment to you.  You shall be solely responsible for the tax consequences with respect to all amounts payable under this Agreement, and in no event shall the Company have any responsibility or liability if this Agreement does not meet any applicable requirements of Code section 409A.
17.Entire Agreement.  You understand and acknowledge that this Agreement, along with any agreements you have signed regarding post-employment duties of nondisclosure, protection of trade secrets, inventions assignment, and/or non-solicitation, contain the entire agreement between the Company and you with respect to any matters referred to in the Agreement and supersedes any previous oral or written agreements.
18.Governing Law.  This Agreement shall be construed, administered and enforced according to the laws of the Commonwealth of Pennsylvania, without regard to choice of law principles, and except as preempted by federal law.
If the above is consistent with your understanding and if you are in agreement with all of its terms, please sign the enclosed copy of this Agreement and return it to me.

Very truly yours,

    
/s/ Robin DeRogatis                        

Agreed to and accepted by the undersigned the 7th day of April, 2015.

 /s/ Jeffry D. Frisby                              /s/ Thomas E. Powers             
Jeffry D. Frisby                    Thomas E. Powers (Witness)

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