Document:

exv10w16

Exhibit 10.16

Xylem

Senior Executive Severance Pay Plan

EFFECTIVE AS OF 10/31/11

1. Purpose

     The purpose of this Xylem Senior Executive Severance Pay Plan (“Plan”) is to assist in
occupational transition by providing severance pay for employees covered by this Plan whose
employment is terminated under conditions set forth in this Plan.

     The Plan first became effective as of October 31, 2011 following the spin-off of Xylem Inc.
from ITT Corporation (the “Predecessor Corporation”) on October 31, 2011. The Predecessor
Corporation maintained a similar plan prior to the spin-off (the “Predecessor Plan”), and the Plan
was created to continue service accruals under the Predecessor Plan. The Plan shall remain in
effect as provided in Section 12 hereof, and Executives shall receive full credit for their service
and participation with the Predecessor Corporation as provided in Section 4 hereof.

2. Covered Employees

     Covered employees under this Plan (“Executives”) are full-time, regular salaried employees of
Xylem Inc. (“Xylem”) and of any subsidiary company (“Xylem Subsidiary”) (collectively or
individually as the context requires “Company”) who are United States citizens, or who are employed
in the United States, in Band A currently (Senior Vice Presidents and above to be further defined
by the Xylem Compensation and Personnel Committee) at any time within the two year period
immediately preceding the date the Company selects as the Executive’s last day of active employment
(“Scheduled Termination Date”).

3. Severance Pay Upon Termination of Employment

     If the Company terminates an Executive’s employment, the Executive shall be provided severance
pay in accordance with the terms of this Plan except where the Executive:

     • is terminated for cause,

     • accepts employment or refuses comparable employment with a purchaser as provided in Section
8, “Divestiture”,

     • is terminated with a Scheduled Termination Date on or after the Executive’s Normal
Retirement Date as defined herein, or

     • voluntarily terminates employment with the Company prior to the Scheduled Termination Date.

     No severance pay will be provided under this Plan where the Executive terminates employment
by:

 

 

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     • voluntarily resigning,

     • voluntarily retiring, or

     • failing to return from an approved leave of absence (including a medical leave of absence).

     No severance pay will be provided under this Plan upon any termination of employment as a
result of the Executive’s death or disability.

     “Normal Retirement Date” shall mean the first of the month which coincides with or follows the
Executive’s 65th birthday.

4. Schedule of Severance Pay

     Severance pay will be provided in accordance with the following Schedule of Severance Pay
which sets forth the months of Base Pay which is provided to an Executive based upon the
Executive’s Years of Service as of the Scheduled Termination Date.

	 	 	 	 	 
	Years of Service	 	Months of Base Pay
	Less than 4
	 	 	12	 
	4
	 	 	13	 
	5
	 	 	14	 
	6
	 	 	15	 
	7
	 	 	16	 
	8
	 	 	17	 
	9
	 	 	18	 
	10
	 	 	19	 
	11
	 	 	20	 
	12
	 	 	21	 
	13
	 	 	22	 
	14
	 	 	23	 
	15 or more
	 	 	24	 

     “Base Pay” shall mean the annual base salary rate payable or in effect with respect to the
Executive at the Scheduled Termination Date divided by twelve (12) months. Such annual base salary
rate shall in no event be less than the highest annual base salary rate paid or in effect with
respect to the Executive at any time during the twenty-four month (24) period immediately preceding
the Scheduled Termination Date.

     “Years of Service” shall mean the total number of completed years of employment since the
Executive’s Xylem system service date to the Scheduled Termination Date, rounded to the nearest
whole year; provided that, for the purposes of “Years of Service,” service shall include years with
the Predecessor Corporation. The Xylem system service date is the date from which employment in the
Xylem system is recognized for purposes of determining eligibility for vesting under the applicable
Company retirement plan covering the Executive on the Scheduled Termination Date; provided,
however, that for purposes of service under the Predecessor Plan,

 

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employment in the Predecessor Corporation’s system is recognized for purposes of determining
eligibility for vesting under the applicable retirement plan covering the Executive.

     Notwithstanding the above Schedule of Severance Pay, (i) in no event shall months of Base Pay
provided to an Executive exceed the number of months remaining between the Scheduled Termination
Date and the Executive’s Normal Retirement Date or (ii) shall severance pay exceed the equivalent
of twice the Executive’s total annual compensation during the year immediately preceding the
Scheduled Termination Date.

     Notwithstanding any other provision of the Plan to the contrary, all prior service and
participation by an Executive with the Predecessor Corporation shall be credited in full towards an
Executive’s service and participation with the Company.

5. Form of Payment of Severance Pay

     Severance pay shall be paid in the form of periodic payments according to the regular payroll
schedule (“Severance Pay”). Severance Pay will commence within 60 days following the Scheduled
Termination Date.

     In the event of an Executive’s death during the period the Executive is receiving Severance
Pay, the amount of severance pay remaining shall be paid in a discounted lump sum to the
Executive’s spouse or to such other beneficiary or beneficiaries designated by the Executive in
writing, or, if the Executive is not married and failings such designation, to the estate of the
Executive. Any discounted lump sum paid under this Plan shall be equal to the present value of the
remaining periodic payments of severance pay as determined by Xylem using an interest rate equal to
the prime rate at Citibank in effect on the date of the Executive’s death.

     If an Executive is receiving Severance Pay, the Executive must continue to be available to
render to the Company reasonable assistance, consistent with the level of the Executive’s prior
position with the Company, at times and locations that are mutually acceptable. In requesting such
services, the Company will take into account any other commitments which the Executive may have.
After the Scheduled Termination Date and normal wind up of the Executive’s former duties, the
Executive will not be required to perform any regular services for the Company. In the event the
Executive secures other employment during the period the Executive is receiving Severance Pay, the
Executive must promptly notify the Company.

     Severance Pay will cease if an Executive is rehired by the Company.

6. Benefits During Severance Pay

     As long as an Executive is receiving Severance Pay, except as provided in this Section or in
Section 7, the Executive will continue to be eligible for participation in Company employee benefit
plans in accordance with the provisions of such plans as in effect on the Scheduled Termination
Date. An Executive will not be eligible to participate in any Company tax qualified retirement
plans, non-qualified excess or supplemental benefit plans, short-term or long-term disability
plans, the Company business travel accident plan or any new employee benefit plan or any
improvement to any existing employee benefit plan adopted by the Company after the Scheduled
Termination Date.

 

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7. Excluded Executive Compensation Plans, Programs, Arrangements, and Perquisites

     During the period an Executive is receiving Severance Pay, the Executive will not be eligible
to accrue any vacation or participate in any (i) bonus program, (ii) special termination programs,
(iii) tax or financial advisory services, (iv) new awards under any stock option or stock related
plans for executives (provided that the Executive will be eligible to exercise any outstanding
stock options in accordance with the terms of any applicable stock option plan), (v) new or revised
executive compensation programs that may be introduced after the Scheduled Termination Date and
(vi) any other executive compensation program, plan, arrangement, practice, policy or perquisites
unless specifically authorized by Xylem in writing. The period during which an Executive is
receiving Severance Pay does not count as service for the purpose of any Xylem long term incentive
award program unless otherwise provided in plan documents previously approved by the Board of
Directors or Compensation and Personnel Committee.

8. Divestiture

     If a Xylem Subsidiary or division of Xylem or a portion thereof at which an Executive is
employed is sold or divested and if (i) the Executive accepts employment or continued employment
with the purchaser or (ii) refuses employment or continued employment with the purchaser on terms
and conditions substantially comparable to those in effect immediately preceding the sale or
divestiture, the Executive shall not be provided severance pay under this Plan. The provisions of
this Section 8 apply to divestitures accomplished through sales of assets or through sales of
corporate entities.

9. Disqualifying Conduct

     If during the period an Executive is receiving Severance Pay, the Executive (i) engages in any
activity which is inimical to the best interests of the Company; (ii) disparages the Company; (iii)
fails to comply with any Company Covenant Against Disclosure and Assignment of Rights to
Intellectual Property; (iv) without the Company’s prior consent, induces any employees of the
Company to leave their Company employment; (v) without the Company’s prior consent, engages in,
becomes affiliated with, or becomes employed by any business competitive with the Company; or (vi)
fails to comply with applicable provisions of the Xylem Code of Conduct or applicable Xylem
Corporate Policies or any applicable Xylem Subsidiary Code or policies, then the Company will have
no further obligation to provide severance pay.

10. Release

     The Company shall not be required to make or continue any severance payments under this Plan
unless the Executive executes and delivers to Xylem within 45 days following the Scheduled
Termination Date a release, satisfactory to Xylem, in which the Executive discharges and releases
the Company and the Company’s directors, officers, employees and employee benefit plans from all
claims (other than for benefits to which Executive is entitled under any Company employee benefit
plan) arising out of Executive’s employment or termination of employment.

 

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11. Administration of Plan

     This Plan shall be administered by Xylem, who shall have the exclusive right to interpret this
Plan, adopt any rules and regulations for carrying out this Plan as may be appropriate and decide
any and all matters arising under this Plan, including but not limited to the right to determine
appeals. Subject to applicable Federal and state law, all interpretations and decisions by Xylem
shall be final, conclusive and binding on all parties affected thereby.

12. Termination or Amendment

     Xylem may terminate or amend this Plan (“Plan Change”) at any time except that no such Plan
Change may reduce or adversely affect severance pay for any Executive whose employment terminates
within two years of the effective date of such Plan Change provided that the Executive was a
covered employee under this Plan on the date of such Plan Change.

13. Offset

     Any severance pay provided to an Executive under this Plan shall be offset in a manner
consistent with Section 15 by reducing such severance pay by any severance pay, salary
continuation, termination pay or similar pay or allowance which Executive receives or is entitled
to receive (i) under any other Company plan, policy practice, program, arrangement; (ii) pursuant
to any employment agreement or other agreement with the Company; (iii) by virtue of any law, custom
or practice. Any severance pay provided to Executive under this Plan shall also be offset by
reducing such severance pay by any severance pay, salary continuation pay, termination pay or
similar pay or allowance received by the Executive as a result of any prior termination of
employment with the Company.

     Coordination of severance pay with any pay or benefits provided by any applicable Xylem
short-term or long-term disability plan shall be in accordance with the provisions of those plans.

14. Miscellaneous Except as provided in this Plan, the Executive shall not be entitled to any
notice of termination or pay in lieu thereof.

     In cases where severance pay is provided under this Plan, pay in lieu of any unused current
year vacation entitlement will be paid to the Executive in a lump sum.

     Benefits under this Plan are paid for entirely by the Company from its general assets.

     This Plan is not a contract of employment, does not guarantee the Executive employment for any
specified period and does not limit the right of the Company to terminate the employment of the
Executive at any time.

     The section headings contained in this Plan are included solely for convenience of reference
and shall not in any way affect the meaning of any provision of this Plan

15. Section 409A

     This Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and will be interpreted in a manner intended to comply with

 

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Section 409A of the Code. Notwithstanding anything herein to the contrary, (i) if at the time
of the Executive’s termination of employment with the Company the Executive is a “specified
employee” as defined in Section 409A of the Code (and any related regulations or other
pronouncements thereunder) and the deferral of the commencement of any payments or benefits
otherwise payable hereunder as a result of such termination of employment is necessary in order to
prevent any accelerated or additional tax under Section 409A of the Code, then the Company will
defer the commencement of the payment of any such payments or benefits hereunder (without any
reduction in such payments or benefits ultimately paid or provided to the Executive) until a date
that is six months following the Executive’s termination of employment with the Company (or the
earliest date as is permitted under Section 409A of the Code), at which point all payments deferred
pursuant to this Section 15 shall be paid to the Executive in a lump sum and (ii) if any other
payments of money or other benefits due hereunder could cause the application of an accelerated or
additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if
deferral will make such payment or other benefits compliant under Section 409A of the Code, or
otherwise such payment or other benefits shall be restructured, to the extent possible, in a
manner, determined by the Company, that does not cause such an accelerated or additional tax. To
the extent any reimbursements or in-kind benefits due under this Plan constitute “deferred
compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be
paid in a manner consistent with Treas. Reg.

     Section 1.409A-3(i)(1)(iv). Each payment made under this Plan shall be designated as a
“separate payment” within the meaning of Section 409A of the Code. The Company shall consult with
Executives in good faith regarding the implementation of the provisions of this section; provided
that neither the Company nor any of its employees or representatives shall have any liability to
Executives with respect thereto.

16. Adoption Date and Amendments

     This Plan was adopted by Xylem on October 31, 2011 (“Adoption Date”) and does not apply to any
termination of employment which occurred or which was communicated to the Executive prior to the
Adoption Date.exv10w17

Exhibit 10.17

FORM
OF XYLEM 

2011 OMNIBUS INCENTIVE PLAN

2011 NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

FOUNDERS GRANT

THIS AGREEMENT (the “Agreement”), effective as of the 7th day of November, 2011, by and between
Xylem Inc. (the “Company”) and [name] (the “Optionee”), WITNESSETH:

WHEREAS, the Optionee is now employed by the Company or an Affiliate (as defined in the Company’s
2011 Omnibus Incentive Plan, (the “Plan”)) as an employee, and in recognition of the Optionee’s
valued services, the Company, through the Leadership Development and Compensation Committee of its
Board of Directors (the “Committee”), desires to provide an opportunity for the Optionee to
acquire or enlarge stock ownership in the Company, pursuant to the provisions of the Plan.

NOW, THEREFORE, in consideration of the terms and conditions set forth in this Agreement and the
provisions of the Plan, a copy of which is attached hereto and incorporated herein as part of this
Agreement, and any administrative rules and regulations related to the Plan as may be adopted by
the Committee, the parties hereto hereby agree as follows:

	1.	 	Grant of Options. In accordance with, and subject to, the terms and conditions of
the Plan and this Agreement, the Company hereby confirms the grant on November 7, 2011, (the
“Grant Date”) to the Optionee of the option to purchase from the Company all or any part of
an aggregate of #,### Shares (the “Option”), at the purchase price of $[ ] per Share (the
“Option Price” or “Exercise Price”). The Option shall be a Nonqualified Stock Option.

	2.	 	Terms and Conditions. It is understood and agreed that the Option is subject to the
following terms and conditions:

	 	(a)	 	Expiration Date. The Option shall expire on November 7, 2021, or, if the
Optionee’s employment terminates before that date, on the date specified in subsection
(f) below.
	 
	 	(b)	 	Exercise of Option. The Option may not be exercised until it has become
vested.
	 
	 	(c)	 	Vesting. Subject to subsections 2(a) and 2(f), the Option shall vest in three
installments as follows:

	 	(i)	 	1/3 of the Option shall vest on November 7, 2012,
	 
	 	(ii)	 	1/3 of the Option shall vest on November 7, 2013, and
	 
	 	(iii)	 	1/3 of the Option shall vest on November 7, 2014,

	 	 	 	Subject to subsections 2(a) and 2(f), to the extent not earlier vested pursuant to
paragraphs (i), (ii), and (iii) of this subsection (c), the Option shall vest in
full

 

 

	 	 	 	upon an Acceleration Event (as defined in the Plan).

	 	(d)	 	Payment of Exercise Price. Permissible methods for payment of the Exercise
Price upon exercise of the Option are described in Section 6.6 of the Plan, or, if
the Plan is amended, successor provisions. In addition to the methods of exercise
permitted by Section 6.6 of the Plan, the Optionee may exercise all or part of the
Option by way of (i) broker-assisted cashless exercise in a manner consistent with
the Federal Reserve Board’s Regulation T, unless the Committee determines that such
exercise method is prohibited by law, or (ii) net-settlement, whereby the Optionee
directs the Company to withhold Shares that otherwise would be issued upon exercise
of the Option having an aggregate Fair Market Value on the date of the exercise equal
to the Exercise Price, or the portion thereof being exercised by way of
net-settlement (rounding up to the nearest whole Share).
	 
	 	(e)	 	Tax Withholding. The Company shall have the power and the right to deduct or
withhold, or require the Optionee to remit to the Company, all applicable federal,
state, and local taxes, domestic or foreign, required by law or regulation to be
withheld with respect to the exercise of the Option. The Optionee may elect to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares that otherwise would be issued upon exercise of the Option, with the
number of Shares withheld having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax that could be imposed on the
transaction (rounding up to the nearest whole Share). Any such election shall be
subject to any restrictions or limitations that the Committee, in its sole discretion,
deems appropriate.
	 
	 	(f)	 	Effect of Termination of Employment.
	 
	 	 	 	If the Optionee’s employment terminates before November 7, 2021, the Option shall
expire on the date set forth below, as applicable:

	 	(i)	 	Termination due to Death. If the Optionee’s employment
is terminated as a result of the Optionee’s death, the Option shall expire on
the earlier of November 7, 2021, or the date three years after the termination
of the Optionee’s employment due to death. If all or any portion of the Option
is not vested at the time of the Optionee’s termination of employment due to
death, the Option shall immediately become 100% vested.
	 
	 	(ii)	 	Termination due to Disability. If the Optionee’s
employment is terminated as a result of the Optionee’s Disability (as defined
below), the Option shall expire on the earlier of November 7, 2021, or the
date five years after the termination of the Optionee’s employment due to
Disability. If all or any portion of the Option is not vested at the time of
the termination of the Optionee’s employment due to Disability, the Option
shall immediately become 100% vested.
	 
	 	(iii)	 	Termination due to Retirement. If the Optionee’s
employment is terminated as a result of the Optionee’s Retirement (as defined
below), the Option shall expire on the earlier of November 7, 2021, or the
date five years after the termination of the Optionee’s employment due to

 

 

	 	 	 	Retirement. If all or any portion of the Option is not vested at the time
of the Optionee’s termination of employment due to Retirement, a prorated
portion of the unvested portion of the Option shall immediately vest as of
the date of the termination of employment (see “Prorated Vesting Upon
Retirement” below). Any remaining unvested portion of the Option shall
expire as of the date of the termination of the Optionee’s employment. For
purposes of this subsection 2(f)(iii), the Optionee shall be considered
employed during any period in which the Optionee is receiving severance
payments (disregarding any delays required to comply with tax or other
requirements), and the date of the termination of the Optionee’s employment
shall be the last day of any such severance period.

	 	(iv)	 	Cause. If the Optionee’s employment is terminated by
the Company (or an Affiliate, as the case may be) for cause (as determined by
the Committee), the vested and unvested portions of the Option shall expire on
the date of the termination of the Optionee’s employment.
	 
	 	(v)	 	Voluntary Termination or Other Termination by the
Company. If the Optionee’s employment is terminated by the Optionee or
terminated by the Company (or an Affiliate, as the case may be) for other than
cause (as determined by the Committee), and not because of the Optionee’s
Retirement, Disability or death, the vested portion of the Option shall expire
on the earlier of November 7, 2021, or the date three months after the
termination of the Optionee’s employment. Any portion of the Option that is
not vested (or the entire Option, if no part was vested) as of the date the
Optionee’s employment terminates shall expire immediately on the date of
termination of employment, and such unvested portion of the Option (the entire
Option, if no portion was vested on the date of termination) shall not
thereafter be exercisable. For purposes of this subsection 2(f)(v), the
Optionee shall be considered employed during any period in which the Optionee
is receiving severance payments, and the date of the termination of the
Optionee’s employment shall be the last day of any such severance period.

	 	 	 	Notwithstanding the foregoing, if an Optionee’s employment is terminated on or after
an Acceleration Event (A) by the Company (or an Affiliate, as the case may be) for
other than cause (as determined by the Committee), and not because of the Optionee’s
Retirement, Disability, or death, or (B) by the Optionee because the Optionee in
good faith believed that as a result of such Acceleration Event he or she was unable
effectively to discharge his or her present duties or the duties of the position the
Optionee occupied just prior to the occurrence of such Acceleration Event, the
Option shall in no event expire before the earlier of the date that is 7 months
after the Acceleration Event or November 7, 2021, .
	 
	 	 	 	Retirement. For purposes of this Agreement, the term “Retirement” shall mean the
termination of the Optionee’s employment if, at the time of such termination, the
Optionee is eligible to commence receipt of retirement benefits under a traditional
formula defined benefit pension plan maintained by the Company or an Affiliate (or
would be eligible to receive such benefits if he or she were a participant in such a
traditional formula defined benefit pension plan) or if no such

 

 

	 	 	 	plan is maintained, the first day of the month which coincides with or follows
the Optionee’s 65th birthday.

	 	 	 	Disability. For purposes of this Agreement, the term “Disability” shall mean the
complete and permanent inability of the Optionee to perform all of his or her duties
under the terms of his or her employment, as determined by the Committee upon the
basis of such evidence, including independent medical reports and data, as the
Committee deems appropriate or necessary.
	 
	 	 	 	Prorated Vesting Upon Retirement. The prorated portion of an Option that vests upon
termination of the Optionee’s employment due to the Optionee’s Retirement shall be
determined by multiplying the total number of unvested Shares subject to the Option
at the time of the termination of the Optionee’s employment by a fraction, the
numerator of which is the number of full months the Optionee has been continually
employed since the Grant Date and the denominator of which is 36. For this purpose,
full months of employment shall be based on monthly anniversaries of the Grant Date,
not calendar months.
	 
	 	(g)	 	Compliance with Laws and Regulations. The Option shall not be exercised at
any time when its exercise or the delivery of Shares hereunder would be in violation
of any law, rule, or regulation that the Company may find to be valid and applicable.
	 
	 	(h)	 	Optionee Bound by Plan and Rules. The Optionee hereby acknowledges receipt of
a copy of the Plan and this Agreement and agrees to be bound by the terms and
provisions thereof as amended from time to time. The Optionee agrees to be bound by
any rules and regulations for administering the Plan as may be adopted by the Committee
during the life of the Option. Terms used herein and not otherwise defined shall be as
defined in the Plan.
	 
	 	(i)	 	Governing Law. This Agreement is issued, and the Option evidenced hereby is
granted, in White Plains, New York and shall be governed and construed in accordance
with the laws of the State of New York, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of this
Agreement to the substantive law of another jurisdiction.

 

 

By signing a copy of this Agreement, the Optionee acknowledges that s/he has received a copy
of the Plan, and that s/he has read and understands the Plan and this Agreement and agrees to the
terms and conditions thereof. The Optionee further acknowledges that the Option awarded pursuant
to this Agreement must be exercised prior to its expiration as set forth herein, that it is the
Optionee’s responsibility to exercise the Option within such time period, and that the Company has
no further responsibility to notify the Optionee of the expiration of the exercise period of the
Option.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its President
and Chief Executive Officer, or a Vice President, as of the 7th day of November, 2011.

	 	 	 

	Agreed to:

	 	XYLEM INC.
	 
	 	 
	 

Optionee

	 	 
	(Online acceptance constitutes agreement)
	 	 
	 
	 	 
	Dated:                                         

	 	Dated: November 7, 2011
	Enclosures

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