Document:

Exhibit 10.1

 

THE VALSPAR CORPORATION

AMENDED AND RESTATED KEY EMPLOYEE

ANNUAL BONUS AND LONG-TERM INCENTIVE PLAN

 

September 30, 2014

 

PURPOSE:

The purpose of The Valspar Corporation Key
Employee Annual Bonus and Long-Term Incentive Plan (the “Plan”) is to more closely align the goals and motivation of
management with those of other Valspar shareholders and to provide key personnel with a long-term capital appreciation opportunity.
This purpose is accomplished by providing annual cash bonuses based on performance; granting options to acquire Valspar Common
Stock; granting Restricted Stock Units earned based on future performance; and granting Restricted Stock Units with vesting based
on service. This amended and restated Plan is effective for Fiscal Years ending after 2014.

 

DEFINITIONS:

Any capitalized terms used in this Plan, but
not defined herein, shall have the meanings set forth in the Omnibus Equity Plan.

 

“Cash Bonus Target Amount” shall
mean the target bonus amount established for a Participant for a particular Fiscal Year as set forth in Section 2 below.

 

“Earned Cash Bonus Amount” shall
mean the amount of the actual cash bonus earned for the Fiscal Year based on performance, as set forth in Section 2 below.

 

“Employee” shall mean each person
who is an employee of Valspar or any Subsidiary which term shall include both full and part-time employees but shall not include
independent contractors providing services to Valspar or its Subsidiaries.

 

“Fiscal Year” shall mean the period
corresponding with each of the fiscal years of Valspar.

 

“LTI Target Value” shall mean the
target long-term incentive value established by the Committee for each Participant for each Fiscal Year, determined by the Committee
as provided herein.

 

“Omnibus Equity Plan” shall mean
the 2009 Omnibus Equity Plan of Valspar, as amended, or any plan adopted and approved by Valspar’s stockholders to replace
the Omnibus Equity Plan.

 

“Participant” shall mean an Employee
whom the Committee has selected to become a Participant, and who remains a Participant pursuant to the provisions of Section 1
of the Plan.

 

“Performance Stock Units” shall
mean Restricted Stock Units that may be earned based upon the level of achievement of specified performance goals, subject to vesting
and other terms of such awards.

 

“Plan” shall mean The Valspar Corporation
Key Employee Annual Bonus and Long-Term Incentive Plan, as set forth herein and as amended from time to time.

 

“Plan Administrator” shall mean
the person or persons designated as such from time to time by the Committee. If no person is designated as the Plan Administrator,
the Plan Administrator shall be the Secretary of Valspar.

 

    	 

    	 

    

“Share Value” means the average
closing price of a share of Common Stock on the New York Stock Exchange for the ten (10) trading days prior to the date of an award
of Performance Stock Units or Restricted Stock Units.

 

“Termination for Cause” shall mean
the termination of employment with Valspar as a result of an illegal act, gross insubordination or willful violation of a Valspar
policy by an Employee.

 

“Valspar” shall mean The Valspar
Corporation, a Delaware corporation.

 

PLAN:

 

        1.         Participants:  Before
the first day of each Fiscal Year, the Committee shall determine the Employees who will be Participants under the Plan for that
Fiscal Year and the LTI Target Value for each Participant. The Committee may also designate newly hired or promoted Employees as
Participants during the Fiscal Year. A Participant will cease being a Participant upon the earlier of (a) his/her termination of
employment with Valspar for any reason or (b) a determination by the Committee that he/she shall no longer be a Participant.

 

        2.         Cash Bonus Determination and
Amount:

 

        (a)        Each Participant will be eligible
for the opportunity to earn a cash incentive bonus for the Fiscal Year. The amount of the cash bonus will be determined consistent
with the provisions of the Omnibus Equity Plan governing Performance Awards.

 

        (b)        The Cash Bonus Target Amount will
be calculated as a percentage of the Participant’s base salary earned in the Fiscal Year. The Earned Cash Bonus Amount will
be a percentage of the Cash Bonus Target Amount, to be determined based on the performance of the Participant and/or Valspar for
such Fiscal Year.

 

        (c)        Notwithstanding the fact that the
Earned Cash Bonus Amount is not determined until after the end of each Fiscal Year, a person who is a Participant on the last day
of a Fiscal Year shall be entitled to his/her Earned Cash Bonus Amount for such Fiscal Year, even if he or she is not a Participant
on the date the Earned Cash Bonus Amount is determined, unless he or she was the subject of a Termination for Cause.

 

        3.         Long-Term Incentive Opportunity:
For each Fiscal Year, each Participant will have a long-term incentive opportunity based on the LTI Target Value established
by the Committee. This opportunity will be delivered in three components, including a Performance Stock Unit opportunity under
Section 4, an award of time-based Restricted Stock Units under Section 5 and an award of non-statutory Stock Options under Section
6 of this Plan.

 

        4.         Performance Stock Units:

 

        (a)        For each Fiscal Year, each Participant
will receive a Performance Stock Unit award under the Omnibus Equity Plan during the first ninety days of such Fiscal Year, typically
in January. The award will become payable, subject to vesting, in accordance with certain performance goals to be achieved during
a three-year performance period starting with such Fiscal Year, and the number of Performance Stock Units will be as provided in
Section 4(b). The Performance Stock Unit award will specify whether it is payable in shares of Common Stock or in cash. Each Participant
will be notified of the target amount and performance goals for the Performance Stock Unit award as soon as practicable after the
date of the award. Terms of the Performance Stock Unit award, including Dividend Equivalents, are described in Exhibit A.

 

        (b)        The target Performance
Stock Unit award for the Fiscal Year is equal to thirty-five percent (35%) of the LTI Target Value determined for each participant
for such Fiscal Year, divided by the Share Value. The number of Performance Stock Units earned and paid out for the three-year
performance period, subject to vesting, will range from 50% of the target number of Performance Stock Units for threshold performance
to a maximum of 250% of the target number of Performance Stock Units. No Performance Stock Units are earned if performance is below
threshold.

 

    	 

    	 

    

        (c)        The first such grants of Performance
Stock Units under this Amended and Restated Plan will be the grants for Fiscal Year 2015, to be granted in January 2015, with a
performance period of Fiscal Years 2015 through 2017.

 

        5.         Restricted Stock Units (Time-Based):

 

        (a)        For each Fiscal Year,
each Participant will receive a time-vested Restricted Stock Unit award under the Omnibus Equity Plan. The number of Restricted
Stock Units covered by the award will be calculated so that the fair value of the Restricted Stock Unit award as determined by
the Committee will be equal to twenty-five percent (25%) of the Target LTI Value for that Participant for the Fiscal Year, divided
by the Share Value. The Restricted Stock Unit award will specify whether it is payable in shares of Common Stock or in cash. Each
Participant will be notified of the number of Restricted Stock Units awarded to him/her as soon as practicable after the date of
the award. Terms of the Restricted Stock Unit award, including Dividend Equivalents, are described in Exhibit A.

 

        (b)        The Restricted Stock Unit award
for a Fiscal Year will be granted on the same grant date as the Performance Stock Unit and subject to three-year vesting.

 

        (c)        The first such grants of Restricted
Stock Units under the Amended and Restated Plan will be the grants for Fiscal Year 2015, to be granted in January 2015.

 

        6.         Non-Statutory
Stock Options:

 

        (a)        For each Fiscal Year, each Participant
will be granted a non-statutory Stock Option under the Omnibus Equity Plan in October prior to the beginning of the Fiscal Year.
The number of shares of Common Stock included in the Stock Option for each Participant will be calculated so that the fair value
of the Stock Option as determined by the Committee will be equal to forty percent (40%) of the LTI Target Value for that Participant
for that Fiscal Year.

 

        (b)        Each Participant will be notified
of the number of shares subject to the Stock Option and the exercise price per share as soon as practicable after the date of the
grant. Terms of the Stock Options are described in Exhibit A.

 

        (c)        In lieu of the award of a non-statutory
Stock Option to a Participant for a Fiscal Year, the Committee may elect, in its sole discretion, to award time-vested Restricted
Stock Units in substitution for all or part of the award of a non-statutory Stock Option. The substituted Restricted Stock Units
will have the payment and vesting terms described in Exhibit A for time-vested Restricted Stock Units.

 

        7.         Amendments: The Board
of Directors of Valspar or the Committee may, at any time and without further action on the part of the shareholders of Valspar,
terminate this Plan or make such amendments as it deems advisable and in the best interests of Valspar; provided, however, that
no such termination or amendment shall, without the consent of the Participant, materially adversely affect or impair the right
of the Participant with respect to an Earned Cash Bonus Amount that the Participant has already earned, or an award of Performance
Stock Units or Restricted Stock Units or a grant of a non-statutory Stock Option or other benefits that the Participant has already
received under the Plan; provided, further, that no such amendment shall accelerate or defer the time or schedule of the vesting
or payment of the Performance Stock Units, the Restricted Stock Units, any Dividend Equivalents or any other compensation that
may be paid under this Plan, except to the extent such acceleration or deferral is permitted or complies with (or is exempt from)
the requirements of Code Section 409A and the regulations promulgated thereunder.

 

 

    	 

    	 

    

	
        Effective Fiscal 2015

        EXHIBIT A

        OFFICERS

	Performance Stock Units (PSUs) – Performance-Based Vesting / Terms and Conditions
	Rights under PSUs	·  	The Performance Stock Units (“PSUs”) represent the right to receive future payouts of Common Stock or cash, with vesting and payment determined according to the level of achievement of performance goals established by the Committee at the time of the award.
	Settlement	·  	Settled in shares of Common Stock or cash as determined by the Committee in its discretion at the time of the award. Any earned PSUs will be payable, subject to vesting, in the equivalent number of shares of Common Stock or a cash amount equal to the fair market value of the equivalent number of shares on the payment calculation date.
	 	·  	Except for Retirement*, such amounts will be payable as soon as practicable following the vesting date, but not later than 21⁄2 months after the vesting date.
	Dividend Equivalents	·  	The Participant will be credited with Dividend Equivalents on the PSUs that are earned, in an amount equal to the dividends that would have been paid on the equivalent number of shares of Common Stock during the three-year performance period. The Dividend Equivalents will be paid out in cash at the time of settlement of the PSUs. 
	Vesting/Forfeiture	·  	The PSUs vest on the third anniversary of the award date, or earlier upon death, Disability, Retirement* or Change in Control, but in any case only to the extent that the performance goals specified in the award are achieved during the three-year period (subject to the terms below for death, Disability or Change in Control). 
	Retirement*	·  	The PSUs vest on the date of Retirement, provided that the amount of the payout will be determined following the end of the three-year performance period and will be based on the level of achievement of the performance goals, proportionately reduced to the extent Retirement occurs before the end of the first Fiscal Year of the performance period for the PSUs. For example, if Retirement occurs on the last day of the eighth month of the first Fiscal Year of the performance period for which the PSUs are awarded and the target level of performance is achieved, the payout at the end of the three-year period will equal two-thirds of the target performance amount.
	 	·  	Payout as soon as practicable following the end of the third Fiscal Year ending after the award date, but not later than 21⁄2 months after such date (unless payment is delayed for six months after a Retirement)
	 	·  	Subject to forfeiture if the Participant violates his or her three-year non-compete agreement before payout
	Death and Disability 	·  	100% vested.  Payout determined using the actual performance level achieved for any Fiscal Year(s) completed prior to termination and assuming the target performance level for any subsequent Fiscal Year(s) during the Performance Period
	Change in Control 	·  	100% vested.  Payout determined using the actual performance level achieved for any Fiscal Year(s) completed prior to the Change in Control and assuming the target performance level for any subsequent Fiscal Year(s) during the Performance Period

    	 

    	 

    

 

	Restricted Stock Units (RSUs) – Time-Based Vesting / Terms and Conditions
	Rights Under RSUs 	·  	The time-based Restricted Stock Units (“RSUs”) represent the right to receive future payouts of Common Stock or cash, with vesting and payment established by the Committee at the time of the award. 
	Settlement	·  	
        Settled in shares of Common Stock or cash as determined
        by the Committee in its discretion at the time of the award. The RSUs will be payable, subject to vesting, in the equivalent number
        of shares of Common Stock or a cash amount equal to the fair market value of the equivalent number of shares on the payment calculation
        date.

        Such amounts will be payable as soon as practicable following
        the vesting date, but not later than 21⁄2 months after the vesting date (unless payment is delayed for six months after a
        Retirement).

	Dividend Equivalents	·  	Dividend Equivalents will accrue and be paid out in cash at the time of settlement of vested RSUs.
	Vesting/Forfeiture	·  	The RSUs vest on the third anniversary of the award date, or earlier upon death, Disability, Retirement* or Change in Control. The RSUs will be forfeited if the Participant’s employment with Valspar otherwise terminates prior to vesting.
	Retirement*	·  	The RSUs vest on the date of Retirement*, provided that the amount of the payout will be proportionately reduced to the extent Retirement occurs before the end of the first Fiscal Year for which the RSUs are awarded.
	 	·  	Subject to forfeiture or repayment if the Participant violates his or her three-year non-compete agreement before the award would normally have vested (the third anniversary of the award date).
	Death and Disability 	·  	100% vested
	Change in Control 	·  	100% vested
	Stock Options / Terms and Conditions
	Option Term	·  	10 years
	Vesting	·  	33 1/3% per year, fully exercisable three years after date of grant
	Retirement*	·  	The options vest on the date of Retirement*, provided that the total amount vested will be proportionately reduced to the extent Retirement occurs before the end of the first full Fiscal Year for which the options are awarded
	 	·  	Fully exercisable for remainder of option term, provided the Participant does not violate his or her non-compete agreement
	Death and Disability 	·  	100% vested
	 	·  	1 year to exercise, not to exceed original option term
	Change in Control	·  	100% vested for remainder of option term
	Termination 	·  	May be exercised to the extent vested at time of termination
	 	·  	30 days to exercise, not to exceed original option term
	Termination For Cause	·  	Forfeit unexercised options

* Retirement is defined in Section 11.4
of the Omnibus Equity Plan as the termination of employment with the Company or a Subsidiary for any reason other than death, Disability
or Termination for Cause at any time after the Participant has attained the age of 55 (or a different age specified for a Participant
for any Incentive) if the Participant has executed and delivered a three-year non-compete agreement and release of claims, has
completed 3 years of continuous prior employment with the Company or a Subsidiary and the required prior written notice, all as
set forth in Section 11.4. If PSUs or RSUs become vested upon a Retirement that qualifies under this Plan, the PSUs or RSUs (and
any interim Dividend Equivalents) will be paid six months after the later of the Retirement date or a “separation from service”
under Code Section 409A. However, any PSUs that are vested upon Retirement will not be paid earlier than the normal payment date.Exhibit 10.2

 

Section 11.4(a) of The
Valspar Corporation 2009 Omnibus Equity Plan is amended and restated as follows:”

 

	11.4	Effect of Retirement or Other
                                         Termination 
	 	 	 
		(a)	In the event of a Participant’s Retirement (as defined below),
if and to the extent provided in the agreement evidencing any Incentive described in this sentence, (1) all outstanding Restricted
Stock Awards, Stock Options, SARs and Restricted Stock Units previously granted to the Participant will become 100% vested, (2)
the Participant shall be entitled to exercise any outstanding Stock Options and SARs for the remainder of the original term of
the Stock Option or SAR, provided that if the Participant violates his/her Non-Compete Agreement (as defined below), all of his/her
unexercised Stock Options and SARs shall terminate immediately and be forfeited to the Company and (3) the Participant will become
entitled to a distribution of any Performance Award as described in Section 10.9. For purposes of this Plan, commencing with Awards
granted on or after September 30, 2014, “Retirement” means the termination of employment with the Company or a Subsidiary
for any reason other than death, Disability or Termination for Cause (as defined below) at any time after the Participant has attained
the age of fifty-five years (or a different age specified for a Participant for any Incentive), provided, that (i) the Participant
has executed a Non-Compete Agreement (as defined below), (ii) the Participant has signed and delivered the Company’s standard
release of claims, and the period in which it may be revoked expired not later than thirty days after the date of termination,
(iii) the Participant has been in the employ of the Company or a Subsidiary continuously for a period of at least three years on
the date of termination, and (iv) Participant has provided written notice to the Company that Participant is considering retirement,
in accordance with any policies for such notices that the Committee may develop from time to time, at least one year prior to the
date of termination. “Non-Compete Agreement” means an agreement not to directly or indirectly render services (including
consulting or research) for a period of three years to any person or business organization that is engaged in the development,
manufacture and sale of any product, process or service (including any component thereof or research to develop information useful
in connection with a product or service) that is being designed, developed, assembled, manufactured, marketed or sold by anyone
other than the Company and which is of the same general type, performs similar functions, competes with or is used for the same
purposes as a product of the Company or a Subsidiary. “Termination for Cause” means the termination of employment with
the Company or a Subsidiary as a result of an illegal act, gross insubordination or willful violation of a policy of the Company
or a Subsidiary by a Participant.

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