Document:

DNR - 2015.03.31 - EX 10j

Exhibit 10(j)

____________ Maximum Performance Shares    Date of Award: ____________

2015 GROWTH AND INCOME PERFORMANCE SHARE AWARD

2004 OMNIBUS STOCK AND INCENTIVE PLAN

FOR DENBURY RESOURCES INC.

This PERFORMANCE SHARE AWARD (this “Award”) is made effective on the Date of Award by Denbury Resources Inc. (the “Company”) in favor of _____________________ (“Holder”).

WHEREAS, in accordance with Section 17 of the 2004 Omnibus Stock and Incentive Plan for Denbury Resources Inc., as amended and/or restated  (the “Plan”), the Committee may grant performance-based Awards;

WHEREAS, the Committee desires to grant to Holder an Award under which Holder can earn a maximum of _________ Performance Shares based on the performance factors set forth in this Award, and subject to all of the provisions, including without limitation the Vesting provisions, of the Plan and this Award;

WHEREAS, no Performance Shares will be issued or outstanding until the Vesting Date or they become Vested Earned Performance Shares; 

WHEREAS, the grant and issuance of a certain number Performance Shares (referred to as the “May Performance Shares”) under this Award are expressly conditioned upon the Company’s stockholders approving the Amended and Restated 2004 Omnibus Stock and Incentive Plan at the Company’s May 2015 annual meeting of stockholders (the “Incentive Plan Stockholder Approval”); and

WHEREAS, the Company and Holder understand and agree that this Award is in all respects subject to the terms, definitions and provisions of the Plan, all of which are incorporated herein by reference, except to the extent otherwise expressly provided in this Award.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows:

1.    Performance Share Grant. The Company hereby grants Holder the right to earn, Vest in, and receive delivery of, on the Delivery Date up to _________ Reserved Shares (“Performance Shares”) subject to the terms and conditions set forth in the Plan and in this Award, including but not limited to those set forth in Section 4 related to Incentive Plan Stockholder Approval.

2.    Definitions. All words capitalized herein that are defined in the Plan shall have the meaning assigned them in the Plan; other capitalized words shall have the following meaning, or shall be defined elsewhere in this Award:

(a) “Actual Reported Production” means production of oil, condensate, natural gas liquids (“NGLs”) and natural gas, expressed on a BOE-per-day basis, as reported in the Company’s Form 10-K for each Fiscal Year within the Performance Period.

(b) “Annual Adjusted Cash Flow” means, for each Fiscal Year within the Performance Period, the result of (i) Cash Flow from Operations, plus (ii) the Commodity Price Adjustment and (iii) Commodity Derivative Settlements, minus (iv) Working Capital Changes and minus (v) Development Capital Expenditures.

(c) “Annual Adjusted Cash Flow Per Share” means for each Fiscal Year within the Performance Period, the quotient (rounded to two decimal places) of (i) Annual Adjusted Cash Flow divided by (ii) Basic Weighted Average Shares Outstanding for that Fiscal Year.

(d) “Annual Production Per Share” means for each Fiscal Year within the Performance Period, the quotient of (i) Actual Reported Production divided by (ii) Basic Weighted Average Shares Outstanding for that Fiscal Year.

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(e) “Basic Weighted Average Shares Outstanding” means for any Fiscal Year, that number of shares of common stock of the Company which is used to compute basic earnings per share for that Fiscal Year as presented on the Company’s Statements of Operations in its Form 10-K.

(f) “BOE” means Barrels of Oil Equivalent, and for all purposes hereof, will be calculated using the ratio of one barrel of crude oil, condensate or NGLs to six thousand cubic feet of natural gas.

(g) “Cash Flow from Operations” means, for each Fiscal Year within the Performance Period, the Company’s operating cash flow for those Fiscal Years as presented on the Company’s Statement of Cash Flows in its Forms 10-K for such Fiscal Years.

(h) “Committee Percentage Point Reduction” means the number (if any) of Performance Percentage Points (not in excess of the Committee Percentage Point Reduction Limitation) by which the Committee reduces Holder’s Performance Percentage Points in accordance with Section 6 hereof.

(i) “Committee Percentage Point Reduction Limitation” means the lesser of (i) twenty-seven (27) Performance Percentage Points, or (ii) the product of (x) Holder’s Performance Percentage Points earned during the Performance Period as determined prior to the application of the Committee Percentage Point Reduction, multiplied by (y) twenty-five percent (25%).

(j) “Commodity Derivative Settlements” means amounts paid, less amounts received, to settle commodity derivative contracts covering production during the Performance Period, adjusted to exclude that portion of current income tax expense (benefit), associated with such settlements, as calculated in the Company’s annual income tax provision.

(k) “Commodity Price Adjustment” means, for each Fiscal Year period within the Performance Period, $20 million multiplied by the result of (i) Forecasted BOE Price specified in Appendix A to this Award minus (ii) the Realized BOE Price.  
 
(l) “Delivery Date” means the date on which Vested Earned Performance Shares are delivered to Holder, which shall be the Vesting Date, or as soon thereafter as practicable, but in no event later than thirty (30) days after the Vesting Date, or the date on which Performance Shares are delivered to Holder at the dates set forth in Section 7(b) or 8(c)(i), (ii) or (iii), if applicable.

(m) “Development Capital Expenditures” means, for each Fiscal Year period within the Performance Period, the sum of the amounts of the line items presented in the “Cash Flow Used for Investing Activities” (or similar) section of the Company’s Statement of Cash Flows in its Form 10-K for such Fiscal Year that represent the Company’s oil and natural gas and CO2 development activities (which for example included in the Company’s Form 10-K for 2014 capital expenditures for oil and gas; CO2 properties; and, pipelines and plants), as such line items showing amounts of capital expenditures may change from year to year, adjusted to include the change in accruals related to those expenditures during the Fiscal Year (as disclosed in the Company’s financial statement footnotes filed in its Form 10-K). As a point of clarification, Development Capital Expenditures should include all capital expenditures incurred during the Fiscal Year, regardless of whether those capital expenditures were paid in cash during the year or recorded as a liability for future payment. Development Capital Expenditures do not include cash outflows incurred to acquire, or invest in, businesses, other entities or properties.

(n) “Disability” means, without limitation, the same as it does in the Plan.

(o) “Earned Performance Shares” means the number of Performance Shares which are earned during the Performance Period as described and calculated in Section 7 hereof.

(p) “Fiscal Year” means the 12-month period adopted by the Company for financial reporting purposes.

(q) “January Performance Shares” means the number Performance Shares to be issued under this Award that are not expressly conditioned upon the Incentive Plan Stockholder Approval and which are set forth in detail under “Table 1- January Performance Shares” in Section 5(a).
(r) “May Performance Shares” means the number Performance Shares to be issued under this Award that are expressly conditioned upon the Incentive Plan Stockholder Approval and which are set forth in detail under “Table 2 - May Performance Shares” in Section 5(a).
(s) “Performance Measure” means the Average Growth and Income Rate, defined in Section 3(a) for the Performance Period.   

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(t) “Performance Period” means the period beginning on January 1, 2015, and ending on December 31, 2017.

(u) “Performance Percentage” means the excess of (i) Holder’s aggregate Performance Percentage Points, over (ii) the Committee Percentage Points Reduction, if any, determined as of the last day of the Performance Period.

(v) “Performance Percentage Points” means, collectively, the points, designated as Performance Percentage Points, earned with respect to the Average Growth and Income Rate Performance Measure during the Performance Period.

(w) “Performance Shares” means the number of Reserved Shares subject to this Award, as shown on the first page of this Award.

(x) “Post Separation Change in Control” means a Change in Control which follows Holder’s Separation, but results from the Commencement of a Change in Control that occurs prior to Holder’s Separation.  For all purposes of this Award, the term “Commencement of a Change in Control” means the date on which any material action, including without limitation through a written offer, open-market bid, corporate action, proxy solicitation or otherwise, is taken by a “person” (as defined in Section 13(d) or Section 14(d)(2) of the 1934 Act), or a “group” (as defined in Section 13(d)(3) of the 1934 Act), or their affiliates, to commence efforts that, within 12 months after the date of such material action, leads to a Change in Control involving such person, group, or their affiliates.

(y) “Realized BOE Price” means the Company’s realized unit sales price per barrel of oil equivalent (excluding the impact of derivative settlements) as presented in the Company’s Form 10-K for each Fiscal Year. 

(z) “Target Performance Shares” means                      of the Performance Shares, which is the number of Performance Shares which will be Earned Performance Shares if Holder’s Performance Percentage is 100%.

(aa) “Working Capital Changes” means for each Fiscal Year within the Performance Period, an amount equal to the sum of the items presented in the “Changes in Assets and Liabilities” (or similar) subsection of the Company’s Statement of Cash Flows in its Form 10-K for such Fiscal year.
  
(bb) “Vesting Date” means March 31, 2018 or the effective date of any earlier (i) Change in Control pursuant to Section 7(b) or (ii) death, disability or Post Separation Change in Control pursuant to Sections 8(c)(i), (ii) or (iii), as appropriate.

3.    Performance Shares as Contractual Right. Each Performance Share represents a contractual right to receive one share of Common Stock of the Company, subject to the terms and conditions of this Award; provided that the number of shares of Common Stock of the Company that may be deliverable hereunder in respect of the Performance Shares may range from 0% to 200% of the number of Target Performance Shares, and Holder’s right to receive Common Stock of the Company in respect of Performance Shares is generally contingent.

4.    Performance Shares Subject to Shareholder Approval. Notwithstanding the other terms and conditions of this Award Agreement, the grant and issuance of the May Performance Shares, are expressly conditioned upon Incentive Plan Stockholder Approval. Holder has no rights or privileges to the May Performance Shares, and cannot vest in or otherwise earn any May Performance Shares, until the Incentive Plan Stockholder Approval (if any). For the avoidance of doubt, nothing contained in this Section 4 affects the rights granted to Holder with respect to January Performance Shares and such Performance Shares are not conditioned upon Incentive Plan Stockholder Approval.

5.    Measurement of Percentage Points Earned With Respect to the Growth and Income Performance Measure

(a) Average Growth and Income Rate Performance Percentage Points.  The Performance Percentage Points which will be credited to Holder for the January Performance Shares and the May Performance Shares are set forth in Table 1 and Table 2 below based on the Average Growth and Income Rate for the three Fiscal Years within the Performance Period.  The “Average Growth and Income Rate” means the quotient (rounded to three decimal places and then expressed as a percentage) of (x) the sum of the Annual Growth and Income Rate for each Fiscal Year during the Performance Period, divided by (y) 3.

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Table 1 - January Performance Shares

	
			
	 
	Average Growth and Income Rate
	Performance
Percentage Points

	A.
	>=11.0%
	57.955

	B.
	>=10.0% and <11.0%
	57.955

	C.
	>=9.0% and <10.0%
	57.955

	D.
	>=7.0% and <9.0%
	53.3

	E.
	Less than 7.0%
	0

Table 2 - May Performance Shares

	
			
	 
	Average Growth and Income Rate
	Performance
Percentage Points

	A.
	>=11.0%
	75.345

	B.
	>=10.0% and <11.0%
	48.745

	C.
	>=9.0% and <10.0%
	22.045

	D.
	>=7.0% and <9.0%
	0

	E.
	Less than 7.0%
	0

(b) Annual Growth and Income Rate.  For purposes of this Award, the “Annual Growth and Income Rate” for each Fiscal Year within the Performance Period shall be equal to the sum of the (i) Annual Production Per Share Growth Rate for that Fiscal Year and (ii) the Annual Adjusted Cash Flow Per Share Rate.

(c) Annual Production Per Share Growth Rate.  For purposes of this Award, the “Annual Production Per Share Growth Rate” for each Fiscal Year in the Performance Period, shall be equal to the quotient (rounded to three decimal places and then expressed as a percentage) of (i) Annual Production Per Share for that Fiscal Year minus Annual Production Per Share for the immediately preceding Fiscal Year (“Prior Fiscal Year”), divided by (ii) Annual Production Per Share for the Prior Fiscal Year.

(d) Annual Adjusted Cash Flow Per Share Rate.  For purposes of this Award, the “Annual Adjusted Cash Flow Per Share Rate” for each Fiscal Year in the Performance Period, shall be equal to the quotient (rounded to three decimal places and then expressed as a percentage) of (i) Annual Adjusted Cash Flow Per Share divided by (ii) the Pro Forma Stock Price, as specified in Appendix B to this award.  

6.    Committee’s Reduction of Performance Percentage Points. 

Notwithstanding any provision hereof to the contrary, the Committee, in its sole discretion, by written notice to Holder prior to the Vesting Date, may reduce Holder’s otherwise total earned Performance Percentage Points (measured by adding the Performance Percentage Points earned in Table 1 plus Table 2) by applying a “Committee Percentage Point Reduction.”

(a) Performance Percentage Points Reduction. The Committee will make its determination of the Committee Percentage Point Reduction amount (if any) based on the Committee’s subjective evaluation of Company performance with respect to each of the four Additional Committee Evaluation Factors listed in (b) below.  This evaluation will determine the amount of the Performance Percentage Point Reduction (not to exceed the Committee Percentage Point Reduction Limitation) that will be the Committee Percentage Point Reduction for the Performance Period:

(b) For purposes of this Award, the “Additional Committee Evaluation Factors” are:

(i)    the Company’s compliance with corporate governance factors such as the ability to obtain an unqualified auditors’ opinion on the Company’s financial statements contained in its Form 10-K for the Performance Period, and avoid any financial restatements,

(ii)    the Company’s maintenance of a reasonable debt-to-capital and/or debt-to-cash-flow ratio,

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(iii)    the Company’s record as to health, safety and environmental compliance and results, and

(iv)    the increase in the net asset value per share of Company stock, determined after excluding the effects, to the extent reasonably practical, caused by fluctuations in commodity prices and capital and operating costs or other factors which are generally not controllable by the Company.

7.    Earning Performance Shares. 

(a) Earned Performance Shares. The number of Earned Performance Shares shall be equal to the product of (i) the Target Performance Shares, multiplied by (ii) the Performance Percentage Points. Only whole shares will be issued to the Holder. The Committee will determine and certify, and the Administrator will advise Holder, of Holder’s Performance Percentage as soon as reasonably possible thereafter.

(b) Change in Control. Notwithstanding the foregoing and any other provision hereof to the contrary, if a Change in Control occurs during the Performance Period then, regardless of the Performance Percentage at the date of the Change in Control, Holder will be entitled to receive delivery of all of the Target Performance Shares (notwithstanding any provision hereof to the contrary, none of which Target Performance Shares will be retained by the Company other than as payment for withholding) as soon as reasonably possible following such Change in Control, but in no event later than the 15th day of the third month after the end of the Fiscal Year in which such Change in Control occurs, and Holder permanently shall forfeit the right to receive any other Performance Shares under this Award.

8.    Vesting (and Forfeiture) of Earned Performance Shares. 

(a) No Separation Prior to the Vesting Date. If Holder does not Separate prior to the Vesting Date Holder will be 100% Vested in the Earned Performance Shares.

(b) Retirement Vesting Date. In the event Holder reaches his Retirement Vesting Date prior to the Vesting Date, Holder will be entitled to receive Performance Shares in an amount equal to the number of Earned Performance Shares on the Vesting Date (which Performance Shares will be delivered to the employee on the Delivery Date), based on the actual performance results certified by the Committee, without any right to receive any additional Performance Shares, and without any proration of the number of Performance Shares earned in such circumstances.  Notwithstanding the foregoing, in the event Holder Separates after Holder’s Retirement Vesting Date, but within 12 months of the Date of Grant, all rights to receive Performance Shares under this Award will be forfeited.

(c) Forfeiture. Except to the extent expressly provided in Sections 8(b) or 8(c) (i), (ii) or (iii), Holder permanently will forfeit all rights with respect to all Performance Shares upon the date of his Separation, if such Separation occurs prior to the Vesting Date.

(i)    Death. If Holder Separates by reason of death prior to the Vesting Date, Holder’s Beneficiary will be entitled to receive Performance Shares in an amount equal to the number of Target Performance Shares (and does not have any right to receive any other Performance Shares under this Award) as soon as reasonably possible, but in no event more than 90 days after Holder’s death.

(ii)    Disability. If Holder Separates by reason of a Disability prior to the Vesting Date, Holder will be entitled to receive Performance Shares in an amount equal to the number of Target Performance Shares (and does not have any right to receive any additional Performance Shares under this Award) as soon as reasonably possible, but in no event later than the 15th day of the third month after the end of the Fiscal Year following the Date on which the Committee determines that Holder is Disabled.

(iii)    Post Separation Change in Control. If there is a Post Separation Change in Control, Holder will be entitled to receive Performance Shares in an amount equal to the number of Target Performance Shares (and does not have any right to receive any additional Performance Shares under this Award) as soon as reasonably possible after the date of the Change in Control, but in no event later than the 15th day of the third month after the end of the Fiscal Year in which such Change in Control occurs.

9.    Withholding. On the Vesting Date, the minimum statutory tax withholding required to be made by the Company, or other 

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withholding rate as determined by the Committee in its discretion if determined not to be detrimental to the Company or Participant, shall be paid by Holder (or Holder’s Beneficiary) to the Administrator in cash, by delivery of Company Common Stock, or by authorizing the Company to retain Performance Shares, or a combination thereof; provided, further, that where Company Common Stock or Performance Shares are delivered or retained, the satisfaction of Holder’s obligation hereunder will be based on the Fair Market Value on the Vesting Date of such delivered or retained Shares.

10.    Issuance of Shares. Without limitation, Holder shall not have any of the rights and privileges of an owner of any of the Company’s Common Stock (including voting rights and dividend rights), until the Vesting Date or such Shares otherwise become Vested Earned Performance Shares. The Administrator shall deliver the Vested Shares (reduced by the number of Vested Shares delivered to the Administrator to pay required withholding under Section 9 above) to the Holder as soon as reasonably possible following Vesting.  The Holder agrees that the delivery of Vested Shares hereunder is subject to the Company’s stock ownership guidelines, as potentially modified from time to time.

11.    Administration. Without limiting the generality of the Committee’s rights, duties and obligations under the Plan, the Committee shall have the following specific rights, duties and obligations with respect to this Award. Without limitation, the Committee shall interpret conclusively the provisions of the Award, adopt such rules and regulations for carrying out the Award as it may deem advisable, decide conclusively all questions of fact arising in the application of the Award, certify the extent to which the Average Growth and Income Rate Performance Measure has been satisfied and the number of Performance Percentage Points earned, exercise its right to reduce Performance Percentage Points, and make all other determinations and take all other actions necessary or desirable for the administration of the Award. The Committee is authorized to change any of the terms or conditions of the Award in order to take into account any material unanticipated change in the Company’s or a Peer Company’s operations, corporate structure, assets, or similar change, but only to the extent such action carries out the original purpose, intent and objectives of the Award, and, to the extent the Award is intended to qualify as “performance based” under Section 162(m) of the Internal Revenue Code, does not affect such qualification. All decisions and acts of the Committee shall be final and binding upon Holder and all other affected parties.

12.    Beneficiary. Holder’s rights hereunder shall be exercisable during Holder’s lifetime only by Holder or Holder’s legal representative. Holder may file with the Administrator a written designation of beneficiary (such person(s) being the Holder’s “Beneficiary”), on such form as may be prescribed by the Administrator. Holder may, from time to time, amend or revoke a designation of Beneficiary. If no designated Beneficiary survives Holder, the Holder’s estate shall be deemed to be Holder’s Beneficiary.

13.    Adjustments in Respect of Performance Shares. In addition to any adjustments under Section 6 herein, in the event of any dividend or split of the primary common equity security of the Company or any Peer Company, or recapitalization (including, but not limited to, the payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to stockholders (other than cash dividends), exchange of such shares, or other similar corporate change, with regard to the Company or any Peer Company, appropriate adjustments may be made to the number of Target Performance Shares in a manner deemed equitable by the Committee.

14.    Holder’s Access to Information. As soon as reasonably possible after the close of the preceding Fiscal Year, the Committee (and the Administrator to the extent it shall have been directed by the Committee) shall make all relevant annually-determined calculations and determinations hereunder, and shall communicate such information to the Administrator. The Administrator will furnish all such relevant information to Holder as soon as reasonably possible following the date on which all, or a substantial majority, of the information is available.

15.    No Transfers Permitted. The rights under this Award are not transferable by the Holder other than by will or the laws of descent and distribution, and so long as Holder lives, only Holder or his or her guardian or legal representative shall have the right to receive and retain Vested Earned Performance Shares.

16.    No Right To Continued Employment. Neither the Plan nor this Award shall confer upon Holder any right with respect to continuation of employment by the Company, or any right to provide services to the Company, nor shall they interfere in any way with Holder’s right to terminate employment, or the Company’s right to terminate Holder’s employment, at any time.

17.    Governing Law. Without limitation, this Award shall be construed and enforced in accordance with, and be governed by, the laws of Delaware.

18.    Binding Effect. This Award shall inure to the benefit of and be binding upon the heirs, executors, administrators, permitted 

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successors and assigns of the parties hereto.

19.    Waivers. Any waiver of any right granted pursuant to this Award shall not be valid unless it is in writing and signed by the party waiving the right. Any such waiver shall not be deemed to be a waiver of any other rights.

20.    Severability. If any provision of this Award is declared or found to be illegal, unenforceable or void, in whole or in part, the remainder of this Award will not be affected by such declaration or finding and each such provision not so affected will be enforced to the fullest extent permitted by law.

IN WITNESS WHEREOF, the Company has caused this Award to be executed on its behalf by its duly authorized representatives on the Date of Grant.

 

DENBURY RESOURCES INC. 

	
				
	By:
	 
	 
	 

	 
	Phil Rykhoek
CEO
	 
	Mark C. Allen
Senior VP, CFO & Asst. Secretary

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ACKNOWLEDGMENT

The undersigned hereby acknowledges (i) receipt of this Award, (ii) the opportunity to review the Plan, (iii) the opportunity to discuss this Award with a representative of the Company, and the undersigned’s personal advisors, to the extent the undersigned deems necessary or appropriate, (iv) the  understanding of the terms and provisions of the Award and the Plan, and (v) the understanding that, by the undersigned’s signature below, the undersigned is agreeing to be bound by all of the terms and provisions of this Award and the Plan.

Without limitation, the undersigned agrees to accept as binding, conclusive and final all decisions, factual determinations, and/or interpretations (including, without limitation, all interpretations of the meaning of provisions of the Plan, or Award, or both) of the Committee regarding any questions arising under the Plan, or this Award, or both.

Dated as of the effective date.
	
			
	 
	 
	 

	 
	 
	Holder Signature

8Exhibit 10.1

Hasbro, Inc.

Performance Rewards Program

January 1, 2015

Hasbro, Inc.

Performance Rewards Program

	
1.0

	
Background

1.1  Performance Rewards Program (PRP)

	 	
§Establishes standard criteria to determine plan eligibility, and overall company, business area or region, and individual performance objectives.

	 	 
	 	
§Provides the guidelines for the establishment of target awards as a percent of annual earned salary based on worldwide band level.

	 	 
	 	
§Plan pay-out is based on a combination of company, business area or region, and individual performance.

	 	 
	 	
§Performance objectives and goals are established to measure performance achievement and may be based on one or a combination of the following: sales (net revenues), operating margin and returns (free cash flow) for company and business area or region performance, as well as an individual component.

1.2     Purpose

Hasbro, Inc., herein referred to as "the Company", has established this plan for the purpose of providing incentive compensation to those employees who contribute significantly to the growth and success of the Company's business; to attract and retain, in the employ of the Company, individuals of outstanding ability; and to align the interests of employees with the interest of the Company's shareholders.

1.2.1  General Guideline

No employee of the Company has any legal entitlement to participate in the PRP or to receive an award under the PRP.

1.3  Scope

The Plan is applicable to all subsidiaries and divisions of the Company, including the Corporate group, on a worldwide basis.

1.3.1  Eligibility

Employees, as determined by management, whose duties and responsibilities contribute significantly to the growth and success of the Company's business, are eligible to participate in the Plan.  Eligibility will be determined by an employee's broad band in accordance with the Company's method of job evaluation as appropriate.  Eligibility to participate in the Plan does not guarantee the receipt of an award under the Plan.

Unless otherwise required by law, if an employee is eligible to participate in the Plan, the Sales Rewards Program, the High Growth Bonus Plan and/or any other annual incentive plan implemented from time to time by the Company, such employee may only participate in one plan per year, such plan as determined by the Company in its sole discretion.

		1.3.2	Exclusion of Senior Management Performance Plan Participants

 Notwithstanding any of the above, those executive officers of Hasbro, Inc. who are identified as participants under the Company's 2009 Senior Management Annual Performance Plan (or any successor shareholder approved bonus plan) are not eligible to participate in the PRP.  However, executive officers who are not identified as participants in the 2009 Senior Management Annual Performance Plan (or a successor plan) are eligible to participate in the Plan.

2.0      Incentive Award Levels

2.1     Target Incentive Award

Target awards are expressed as a percentage of earned salary for the plan year.  For purposes of this Plan, earned salary means all base compensation for the participant for the year in question, which base compensation shall include all base compensation amounts deferred into the Company's retirement savings plan, the Company's Non-Qualified Deferred Compensation Plan, and/or any similar successor plans for the fiscal year and excludes any bonus or other benefits, other than base compensation, for the plan year.  By design, these are the award levels that plan participants are eligible to earn when they and their applicable business units perform as expected (i.e., achieve their goals and objectives).  Incentive target awards are determined by salary band and vary by country.

2.2     Maximum Incentive Award

Under this incentive plan the maximum award for employees below band WW80 is 200% of the target award.  The maximum award for employees in band WW80 or above is 300% of the target award.

3.0      Measures of Performance for 2015

		3.1	Establishing Company and Business Area or Region Performance Targets

In the first quarter of the plan year, the Company's senior management establishes the level of target performance for the year associated with each of the Company and business area or region performance metrics.  Those target levels are reviewed and approved by the Company's President and Chief Executive Officer and by the Compensation Committee of the Company's Board of Directors (the "Compensation Committee").

3.2     Overall Company Performance

Each PRP formula award contains a performance component related to overall Hasbro company performance.  For 2015, the Company component is measured by Sales, Operating Margin, and Returns.  Overall Company performance is determined by individually assessing performance against goal for each metric, applying the acceleration/deceleration scale, weighting each metric and summing the total.   The weighting and definition of the overall Company measures are:

	
Measure

	
Definition

	
% of Company Measure

	
Sales (net revenues)

	
Third Party Gross Sales (after returns) less Sales Allowances plus Third Party Royalty Income

	
40%

	
Operating Margin

	
Operating Profit divided by Net Revenues

	
40%

	
Returns (Free Cash Flow)

	
Net cash provided by operating activities – Capital Expenditures

	
20%

 

              Each metric, before the acceleration/deceleration scale is applied, must achieve a threshold performance of 80% or no award is payable under the metric that did not achieve threshold performance.

For example:

If sales is achieved at 100% of target (which results in 100% payout based on the acceleration/deceleration scale) and operating margin is achieved at 85% of target (which results in at 70% payout) but returns does not reach threshold performance, then overall Company performance will only pay out on sales and operating margin.  The aggregate weighted payout would be:

(100% x 40%) + (70% x 40%) + (0% x 20%) = 68%

Corporate payout would be 68%.

3.3     Individual Performance

 

Individual performance will be determined by the participant's supervisor and approved by the Division/Subsidiary senior executive or Corporate functional head, where appropriate.  It will be based upon actual job performance consistent with goals/objectives outlined during performance reviews for the plan year.

3.4     Business Area or Region Performance

 

Each business area or region, as determined under this program, will assess performance based on Sales and Operating Margin specific to the business area or region.  Unlike the Company component where an individual metric's failure to reach the threshold performance of 80% does not impact another individual metric's ability to reach the threshold performance and payout, for the business area or region component, the individual performance of each metric must meet a minimum threshold performance of 80%, before the acceleration/deceleration scale is applied, or no award is payable for the business area or region component. The weighting and definition of the business area or region component are:

	
Measure

	
Definition

	
% of Company Measure

	
Sales (net revenues) Growth

	
Third Party Gross Sales (after returns) less Sales Allowances plus Third Party Royalty income

	
50%

	
 

Operating Margin

	
 

Operating Profit divided by Net Revenues

	
50%

  

Those jobs, which are corporate in nature will comprise the "Corporate" business area or region and the performance for this component will be based on overall Company performance as described in section 3.2, rather than the business area or region measures outlined above in this Section 3.4.

		3.4.1	Bonus formula metrics for employees in bands WW70 and below are used to assess performance at the overall Company level, business area or region level (where applicable), and individual level.

A portion of all PRP formulas will have metrics tied to Corporate performance and individual performance.  The weighting of the Corporate component may be 1/3 or 2/3 (in the case of employees in the "Corporate" business area or region) of the formula metric and the individual component will be weighted 1/3 of the formula metric. Similarly, the business area or region component will be 1/3 of the formula metric and used in formulas where appropriate.

Bonus formula metrics are subject to review annually by the CEO.

		3.4.2	Bonus formula metrics for WW80 employees are based on the employee's role and will be comprised of either 100% overall company performance with a personal performance modifier (see note below) or be based on 40% overall company performance and 60% business area or region performance with a personal performance modifier (see note below).

*Definition of the personal performance modifier: Individual Management Business Objectives (MBOs) are set before the end of Q1 of the plan year. These are established between the WW80 employee and the CEO and/or COO.  Performance is reviewed annually - if MBO's are exceeded, pay out can be up to 150% of formula bonus; if MBO's are met, pay out can be up to 100% of formula bonus; if MBO's are not met, pay out can be reduced to 0% of formula. Maximum bonus may not exceed 300% of the target.

	
4.0

	
Development of Formula Incentive Award

At the end of the fiscal year, the overall Company and each business area or region's actual performance for each financial component of the formula portion of the bonus awards will be calculated (based on the Company's and each business area or region's performance as of year-end) and approved by the Chief Financial Officer, ("CFO").  Each metric of the business area or region (net revenue and operating margin) must individually achieve a minimum performance of 80% against target to qualify for business area or region component payout.  If one metric achieves 80% or higher, and the other metric does not, the business area or region component payout will be 0%.  An acceleration/deceleration scale will then be applied to each individual metric as follows to develop the payout for each metric:

	
 

	 

Performance %

	
 

	
 

	 

Payout Scale %

	
 

	
 

	
 

	
 

	
 

	
< 80%

	
 

	
 

	
0%

	
 

	
 

	
Minimum Performance 80%

	
 

	
 

	
80%

	
 

	
 

	
60%

	
 

	
 

	
For ever 1% below target, 2% decrease in award

	
 

	
 

	
100%

	
 

	
 

	
100%

	
 

	
 

	
Target performance = 100% payout

	
 

	
 

	
105%

	
 

	
 

	
115%

	
 

	
 

	
For every 1% above 100%, 2% increase in award

	
 

	
 

	
111%

	
 

	
 

	
134%

	
 

	
 

	
For every 1% above 110%, 4% increase in award

	
 

	
 

	
127%

	
 

	
 

	
200%

	
 

	
 

	
Maximum Payout

	
 

In contrast, for the Company component, the 80% threshold is applied to each metric before the acceleration/deceleration scale is applied.  Each metric must then achieve a threshold performance of 80% or no award is payable under the metric that did not achieve the threshold performance.

The payout attributable to each metric will then be weighted and added to arrive at the overall formula payout.

Illustrative examples of the development of a formula payout for a business area or region component are as follows:

If business area or region revenue is achieved at 90% of target (which results in an 80% payout based on the acceleration/deceleration scale) and operating margin is at 65% (which is below 80% threshold), the business unit will not pay out.   

or

If business area or region revenue is achieved at 90% target (which results in an 80% payout), and operating margin is achieved at 85% target (which results in a 70% payout) the aggregate weighted payout is:

                        (80% x 50%) + (70% x 50%) = 75% business unit payout

Once all of the business areas or regions have calculated the formula incentive awards, the award pools by business areas or regions are developed.  These business area/region award pools, combined with the formula incentive award at the corporate level, will equal the aggregate of the formula incentive awards for all eligible employees in the Company, including the budgeted individual performance component for all eligible employees.

 

        4.1     Formula Award

The formula incentive award is a calculation of an award based on the actual performance achieved by the overall Company, and each of its applicable business area or region, as well as the budgeted individual performance percentage to be applied across the Company as a whole.

Business area or region incentive pool dollars are derived from the aggregate of the formula awards within the business area or region.

		4.2	Formula Pool

The Company calculates, based on the Company's performance through the end of the year, the performance at the corporate level, and for each business area or region at the business area or region level, against the applicable performance targets.  The Company also calculates, based on the Company's and its business area or region's performance, the targeted total pool to be used for the year for rewarding individual performances across the Company as a whole.  Those pools as established (composed of the pools for the Company's performance, the performance of each of the Company's business area or region, and for the total individual performances across the Company) are aggregated.  Collectively these amounts constitute one aggregate formula pool (referred to hereafter as the "Formula Pool"), based on performance as of the end of the year, which the Company will pay out to all participants in the PRP collectively for performance during the year.

Although the Chief Executive Officer of the Company and the Compensation Committee reserve the right to alter the Formula Pool after year end, but prior to the actual payment of awards to participants in the PRP, it is expected that such discretion will only be exercised in rare or extreme circumstances, and that generally the entire Formula Pool, as it has been computed, will be paid (absent any affirmative exercise of this discretion) out to the participants in the PRP collectively following the closing of the year in question.

		4.3	Additional Individual Performance Awards in Excess of the Formula Award

Following the end of the year, but prior to the payment of all awards under the PRP with respect to the completed fiscal year, management of the Company may determine to add additional funding to the plan to cover individual performance awards for some employees or officers in excess of the amounts used to compute the Formula Pool.  To the extent such determinations are made they are subject to the approval of the appropriate management of the Company.  Collectively any amounts set aside to reward individual performances and personal performance multipliers across the Company beyond the aggregate amount reflected in the Formula Pool will hereafter be referred to as the "Additional Individual Performance Pool".  The aggregate amount of the Additional Individual Performance Pool is subject to the approval of both the Chief Executive Officer and the Compensation Committee.

4.4     Total Awards under the PRP

The aggregate of all payouts under the PRP shall consist of the sum of the Formula Pool and the Additional Individual Performance Pool.  In addition to the procedures set forth above, any performance awards recommended under the PRP which exceed one times a participant's base salary must be reviewed and approved by the Company's Chief Executive Officer.

4.5     Management Review

Payment of any award to an employee is subject to management's review.

	
§

	
For purposes of the PRP, management has the ability to review the proposed payout of any award under the PRP to an eligible plan participant and to determine whether such proposed payout should be adjusted.   In completing this review, management has the option of providing a zero value payout to the employee regardless of Company, business area, regional or individual performance.  For participants that do not receive an award or that receive a reduced award, the portion of such person's potential award that might have been reflected in the Formula Pool will remain in the Formula Pool and be allocated to other plan participants in the manner determined by management.

5.0           Removals, Transfers, Terminations, Promotions and Hiring Eligibility

Except to the extent applicable legal requirements mandate a different result for a Plan participant, the following scenarios will be dealt with under the Plan in the manner set forth below.

		5.1	Participants whose employment with the Company is terminated because of retirement or disability:

	 	
§After the close of the plan year, but prior to the actual distribution of awards for such year, may be awarded an incentive award for the plan year at the discretion of the Chief Human Resource Officer.  For any such participant who is not given an incentive award, the portion of such person's potential award that might have been reflected in the Formula Pool will remain in the Formula Pool and be allocated to other plan participants in the manner determined by management.

	 	 
	 	
§After the beginning, but prior to the close of the plan year, no award shall be granted unless authorized at the discretion of the Chief Human Resource Officer.

5.2     Participants whose employment with the Company is terminated because

of death:

	 	
§After the close of the plan year, but prior to the actual distribution of awards for such year, shall be awarded an incentive award for the plan year.  Such payment will be made to the deceased employee's estate or designated beneficiary.

	 	 
	 	
§After the beginning, but prior to the close of the plan year, no award shall be granted unless authorized at the discretion of the Chief Human Resource Officer.  Any such payments will be made to the deceased employee's estate or designated beneficiary.

		5.3	Participants who resign for any reason after the close of the plan year but prior to the distribution of awards for such year will not receive an incentive award.  For any such participant, the portion of such person's potential award that might have been reflected in the Formula Pool will remain in the Formula Pool and be allocated to other plan participants in the manner determined by management if the planning budgets have already been established.

5.4     Participants who are discharged from the employ of the Company or any

of its subsidiaries for cause or for any offense involving moral turpitude or

an offense involving breach of the fiduciary duty owed by the individual to the Company will not be entitled to an award for any plan year.  For any such participant, the portion of such person's potential award that might have been reflected in the Formula Pool will remain in the Formula Pool and be allocated to other plan participants in the manner determined by management.

		5.5	Participants who are discharged from the employ of the Company or any of its subsidiaries due to any reason other than the ones enumerated above, including, without limitation, participants who are discharged due to job elimination:

	 	
§After the close of the plan year, but prior to the actual distribution of awards for such year, may be awarded an incentive award for the plan year.  No award shall be granted unless authorized at the discretion of the Chief Human Resource Officer.  For any such participant who is not given an incentive award, the portion of such person's potential award that might have been reflected in the Formula Pool will remain in the Formula Pool and be allocated to other plan participants in the manner determined by management.

	 	 
	 	
§After the beginning, but prior to the close of the plan year, the participant is no longer eligible for that year.  However, a discretionary award may be granted by the Chief Human Resource Officer.

	 	 

		5.6	Participants under statutory or contractual notices as may be required by applicable law:

	 	
§On December 31st of the plan year, may be awarded an incentive award for the plan year.  Except as may be required by applicable laws, no award shall be granted unless authorized at the discretion of the Chief Human Resource Officer.  For any such participant who is not given an incentive award, the portion of such person's potential award that might have been reflected in the Formula Pool will remain in the Formula Pool and be allocated to other plan participants in the manner determined by management.

	 	 
	 	
§Which ends prior to the close of the plan year shall not be eligible for an incentive award for that plan year.  However, a discretionary award may be granted by the Chief Human Resource Officer.

		5.7	Participants transferred during the plan year from one division of the Company to another will be eligible to receive an award (subject to achievement of the requisite organizational and individual performance) through the division in which he or she is employed at the end of the plan year, but the award amount may be based on the performance made in each division in which the individual was employed during the year.

		5.8	Employees hired during the plan year must be actively employed on or before October 1st of the plan year to participate in the bonus for that plan year.  Awards will be made based upon the employee's earned salary during the period of their employment with the Company during the plan year.

		5.9	The eligibility for an award and plan status of employees who remain employed with the Company during the plan year but whose change in employment status through promotion or reclassification affects their level of participation:

	 	
§Prior to October 1st of the plan year, will participate at the level consistent with the promotion or reclassification.

	 	
§After October 1st but prior to the close of the plan year, will participate at the level consistent with their classification prior to the promotion or reclassification.

		5.10	The eligibility for an award and plan status of employees who remain employed with the Company during the plan year but whose change in employment status through demotion affects their level of participation will be determined by the Chief Human Resource Officer.

6.0           Administration of the Plan

6.1     Amendments to the Plan (Contingency Clause)

The Chief Executive Officer and the Compensation Committee of the Board of Directors reserve the right to interpret, amend, modify, or terminate the Plan in accordance with changing conditions at any time in their sole discretion.

6.2     Incentive Award Distribution

Incentive awards, when payable, shall be paid as near to the close of the company's fiscal year as may be feasible.  In furtherance of the preceding sentence, any incentive awards under the Plan will be paid no later than the date allowable to insure tax deductibility in the year of accrual, which in the case of the United States is March 15, 2015.  Participants in the Plan must be employed at the time of award distribution in order to receive bonus payments, except as provided in Section 5.0.

                          No individual has the rights to receive an award until it has been approved and

                          distributed in accordance with the provisions of this plan.

6.3     Non-Assignment of Awards

Participants eligible to receive incentive awards shall not have any right to pledge, assign, or otherwise dispose of any unpaid or projected awards.

6.4     Deferral of Awards

Participants eligible to defer incentive awards through the Deferred Compensation Program (DCP) may elect to do so during the annual DCP enrollment.

6.5     Clawback of Awards

By accepting any incentive compensation under the Plan the participant hereby acknowledges and agrees that (i) any incentive compensation the participant is awarded is subject to the Company's Clawback Policy, which was adopted by the Company's Board of Directors in October 2012, and (ii) any incentive compensation the participant is awarded will be subject to the terms of such Clawback Policy, as it may be amended from time to time by the Board in the future.  Such acknowledgement and agreement was a material condition to receiving any incentive compensation under the Plan, which would not have been awarded to the participant otherwise. 

		6.6	Stock Ownership

Additionally, the participant acknowledges and agrees that if the participant is now, or becomes subject in the future to, the Hasbro, Inc. Executive Stock Ownership Policy, effective as of March 1, 2014 as it may be amended from time to time by the Board in the future (the "Stock Ownership Policy"),  then the receipt of any incentive compensation under the Plan is contingent upon the participant's compliance with the terms of the Stock Ownership Policy, including without limitation, the requirement to retain an amount equal to at least 50% of the net shares received as a result of the exercise, vesting or payment of any equity awards granted until the Participant's applicable requirement levels are met.  Failure to comply with the Stock Ownership Policy may, in the Company's sole discretion, result in the reduction or total elimination of any incentive compensation that otherwise might be payable under the Plan, and/or result in the Company determining to substitute other forms of compensation, such as equity, for any award the participant otherwise might have received under the Plan.

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