Document:

ex1010-revisednonxemploy

  MOHAWK INDUSTRIES, INC.  NON-EMPLOYEE DIRECTOR COMPENSATION PLAN    ARTICLE 1  PURPOSE OF THE PLAN    1.1 Background and Purpose. Mohawk Industries, Inc. (the “Corporation”)  maintains the Non-Employee Director Compensation Plan (the “Plan”) to promote the  long-term growth of Mohawk Industries, Inc. by providing a vehicle for Non-Employee  Directors to increase their proprietary interest in the Corporation and to attract and retain  highly qualified and capable Non-Employee Directors. The Plan is governed by the  Mohawk Industries, Inc. 2017 Incentive Plan (the “Incentive Plan”), and any subsequent  equity compensation plan approved by the stockholders and designated by the Board as the  Incentive Plan for purposes of this Plan.     1.2 Status of Plan. Article 7 of the Plan is intended to be a nonqualified,  unfunded plan of deferred compensation under the Internal Revenue Code of 1986, as  amended. Article 7 of the Plan is further intended to conform with the requirements of  Internal Revenue Code Section 409A and the final regulations issued thereunder and shall  be interpreted, implemented and administered in a manner consistent therewith.    ARTICLE 2  DEFINITIONS    2.1 Defined Terms. Unless the context clearly indicates otherwise, the following  terms shall have the following meanings:    “Annual Retainer” means the annual cash retainer fee payable by the Corporation  to a Non-Employee Director for services as a director (and, if applicable, as the  chairman of a committee of the Board) of the Corporation, as such amount may be  changed from time to time.    “Board” means the Board of Directors of the Corporation.    “Business Day” shall mean a day on which the New York Stock Exchange or any  national securities exchange or over-the-counter market on which the Shares are  traded is open for business.    “Cash/Shares Election Form” means a form, substantially in the form attached  hereto as Exhibit A, pursuant to which a Non-Employee Director elects to receive  his or her Annual Retainer for a particular Service Year in the form of cash, a 50/50  split of cash and Shares or all Shares, as provided in Section 6.3.    “Change of Control” has the meaning set forth in the Incentive Plan.  “Committee” means the Compensation Committee of the Board.      ATL01/11605156v4  

 

- 2 -     “Common Stock” means the $0.01 par value common stock of the Corporation.  “Corporation” means Mohawk Industries, Inc.  “Deferral Election Form” means a form, substantially in the form attached hereto  as Exhibit B, pursuant to which a Non-Employee Director elects to defer his or her  Annual Retainer under the Plan.    “Election Date” means the date established by the Plan as the date by which a  Participant must submit to the Plan Administrator (i) a valid Shares Election Form  in order to receive Shares in lieu of Annual Retainer for a Service Year, (ii) a valid  Cash Election Form to receive cash in a subsequent Service Year, or (iii) a valid  Deferral Election Form to defer Annual Retainer pursuant to Article 7. The Election  Date is December 31 of each year with respect to an election to be effective for the  Service Year beginning on the following annual meeting date. For example, the  Election Date with respect to the Service Year from May 2017 to May 2018 would  be December 31, 2016; provided, however, that the Election Date for a newly  eligible Participant shall be the 30th day following the date on which such  individual becomes a Non-Employee Director.    “Fair Market Value” has the meaning set forth in the Incentive Plan.    “Non-Employee Director” means a director of the Corporation who is not an  employee or consultant of the Corporation or any subsidiary of the Corporation.    “Participant” means any Non-Employee Director who is participating in the Plan.    “Phantom Stock” means a hypothetical unit of value equal to the Fair Market Value  of one share of Common Stock. The concept of Phantom Stock is for bookkeeping  purposes only.    “Plan” means the Mohawk Industries, Inc. Non-Employee Director Stock  Compensation Plan.    “Plan Administrator” means the Committee or the agent(s), if any, appointed by the  Committee pursuant to Section 3.2 to assist in the administration of the Plan.    “Service Year” means a year of director service, which is the approximate 12-  month period between annual meetings of the Corporation’s stockholders.    “Shares” means shares of Common Stock.    “Stock Account” means the account established by the Corporation for each  Participant for Annual Retainer deferred pursuant to Article 7 of the Plan, the  performance and value of which shall be measured by reference to the Fair Market  

 

- 3 -   Value of the Common Stock from time to time. The maintenance of individual  Stock Accounts is for bookkeeping purposes only.    “Termination of Service” occurs when a Participant ceases to serve as a Non-  Employee Director for any reason.    ARTICLE 3  ADMINISTRATION OF THE PLAN    3.1 Administrator of the Plan. The Plan shall be administered by the Committee.  The Committee shall have the rights set forth in Article 4 of the Incentive Plan with respect  to the administration of the Plan.    ARTICLE 4  ELIGIBILITY    4.1 Eligibility. All active Non-Employee Directors of the Corporation shall be  eligible to participate in the Plan.    ARTICLE 5  ANNUAL RESTRICTED STOCK UNIT GRANT    5.1   Annual Grant. The Corporation shall grant to each Non-Employee Director on  the first Business Day of each year a number of restricted stock units (RSUs) having a  dollar value of $165,000, which may be adjusted by resolution of the Committee from time  to time; provided such director is serving on the Board on such date. One-third (1/3) of such  RSUs shall vest and convert into a corresponding number of Shares on each of the first  three anniversaries of the date of the grant. The number of RSUs to be so granted shall be  determined by dividing $165,000 by the average of the daily closing prices for the Common  Stock for the last thirty (30) consecutive trading days of the immediately preceding  calendar year on which such shares are actually traded on the New York Stock Exchange.   Fractional shares shall be rounded to the nearest whole share.    ARTICLE 6  ANNUAL RETAINER    6.1 Board Annual Retainer. Each Non-Employee Director shall receive an  annual retainer of $100,000 in cash, which may be adjusted by resolution of the Committee  from time to time.    6.2 Committee Chair Annual Retainer. The Nominating and Corporate  Governance Committee Chairman shall receive an additional annual retainer of $15,000 in  cash, the Compensation Committee Chairman shall receive an additional annual retainer  of $20,000 in cash, and the Audit Committee Chairman shall receive an additional annual  retainer of $25,000 in cash. Such additional retainers for the committee chairmen may be  adjusted by resolution of the Committee from time to time.  

 

- 4 -   6.3 Election to Receive Shares. On the first Business Day of January following  each annual meeting of stockholders of the Corporation, Shares shall be granted to each  Non-Employee Director who either (i) on or before the Election Date for the then–current  Service Year, filed with the Plan Administrator a written irrevocable Cash/Shares Election  Form, indicating such Non-Employee Director's election to receive either (a) all of his or  her Annual Retainer payable with respect to such Service Year in Shares or (b) 50% of his  or her Annual Retainer payable with respect to such Service Year in Shares, or (ii) filed a  Cash/Shares Election Form for any prior Service Year and did not file a Cash/Shares  Election Form (as described in Section 6.4 below) with respect to the current Service Year.    6.4 Subsequent Elections. Once a Non-Employee Director files a Cash/Shares  Election Form or a Deferral Election Form for any Service Year, that election will carry  forward into subsequent Service Years unless, on or before the Election Date for any  subsequent Service Year, the Non-Employee Director files a separate Cash/Shares Election  Form or Deferral Election Form for such subsequent Service Year.    6.5 Number of Shares. The payment of the Annual Retainer in the form of  Shares shall be paid approximately mid-way through the Service Year (January), but based  on the quarterly price points during the preceding calendar year. Therefore, the number of  Shares to be granted in January of each year pursuant to this Article 6 shall be the sum of  A, B, C and D below:    A = (i) one quarter (1⁄4) of the Annual Retainer for the applicable Service Year,  divided by (ii) the Fair Market Value per Share as of January 1 of the immediately  prior calendar year (whether or not the director was in office on such prior January  1).    B = (i) one quarter (1⁄4) of the Annual Retainer for the applicable Service Year,  divided by (ii) the Fair Market Value per Share as of April 1 of the immediately  prior calendar year (whether or not the director was in office on such prior April 1).    C = (i) one quarter (1⁄4) of the Annual Retainer for the applicable Service Year,  divided by (ii) the Fair Market Value per Share as of July 1 of the immediately prior  calendar year.    D = (i) one quarter (1⁄4) of the Annual Retainer for the applicable Service Year,  divided by (ii) the Fair Market Value per Share as of October 1 of the immediately  prior calendar year.    If a director elects to receive 50% of his or her Annual Retainer in Shares and 50%  in cash, then the number of Shares to be granted to such director shall be determined by  replacing “one quarter (1/4)” with “one eighth (1/8)” in A, B, C and D above. In  determining the number of Shares to be granted, any fraction of a share will be disregarded  and the remaining amount of the Annual Retainer shall be paid in cash.  

 

- 5 -   ARTICLE 7  ELECTION TO DEFER ANNUAL RETAINER    7.1 Election to Defer. A Non-Employee Director may elect to defer his or her  Annual Retainer under the Plan by delivering a properly completed and signed Deferral  Election Form to the Plan Administrator on or before the Election Date. The Non-  Employee Director's deferral will be effective as of December 31 that precedes the Service  Year to which the Deferral Election relates, or, in the case of a newly eligible Participant,  on the 30th day following the date on which such individual becomes a newly eligible  participant.    7.2 Termination or Continuation of Deferral Election Form.    (a) Voluntary Termination. A Participant may terminate his or her Deferral  Election Form at any time. Such termination will be effective on the first day of the Service  Year after the Participant notifies the Plan Administrator of the Participant's termination of  the Deferral Election Form, but shall only be effective with respect to future Annual  Retainers. Any Annual Retainer deferred prior to the termination of the Deferral Election  Form shall remain deferred in accordance with the original Deferral Election Form and the  Plan. The Participant may deliver a new Deferral Election Form on or before the Election  Date and thereby defer the receipt of any future Annual Retainer.    (b) Automatic Termination of Deferral Election Form. A Participant's Deferral  Election Form will automatically terminate at the earlier of (i) the Participant's Termination  of Service, or (ii) the termination of the Plan.    7.3 Stock Account. For bookkeeping purposes, the Annual Retainer that a Non-  Employee Director elects to defer pursuant to the Plan shall be transferred to and held in  an individual Stock Account in the name of such Participant. Amounts to be deferred shall  be credited to the Participant's Stock Account as of the date such Annual Retainer is  otherwise payable. Amounts deferred into a Stock Account are recorded as units of  Phantom Stock, and fractions thereof, with one unit equating to a single share of Common  Stock. Thus, the value of one unit of Phantom Stock shall equal the Fair Market Value of  a single share of Common Stock. The use of units is merely a bookkeeping convenience;  the units are not actual shares of Common Stock. As described below in Section 7.5, a  Participant may elect to have some or all of the value of his or her Stock Account distributed  in actual shares of Common Stock. To the extent required for bookkeeping purposes, a  Participant's Stock Account will be subdivided to reflect deferred Annual Retainer on a  year-by-year basis. For example, a 2017 Stock Sub-Account, a 2018 Stock Sub-Account,  and so on.    7.4 Credits to the Stock Account.    (a) Initial Crediting of Stock Account. If a Participant elects to defer his or her  Annual Retainer into his or her Stock Account, such account shall be credited, as of the  date described in Section 7.1, with that number of units of Phantom Stock, and fractions  

 

- 6 -   thereof, obtained by dividing the dollar amount to be deferred into the Stock Account by  the Fair Market Value of the Common Stock as of such date.    (b) Dividend Equivalents. Effective as of the payment date for each cash  dividend on the Common Stock, the Stock Account of each Participant who had a balance  in his or her Stock Account on the record date for such dividend shall be credited with a  number of units of Phantom Stock, and fractions thereof, obtained by dividing (i) the  aggregate dollar amount of such cash dividend payable in respect of such Participant's  Stock Account (determined by multiplying the dollar value of the dividend paid upon a  single share of Common Stock by the number of units of Phantom Stock credited to the  Participant’s Stock Account on the record date for such dividend); by (ii) the Fair Market  Value of the Common Stock on the business day immediately preceding the payment date  for such cash dividend.    (c) Stock Dividends. Effective as of the payment date for each stock dividend  on the Common Stock, additional units of Phantom Stock shall be credited to the Stock  Account of each Participant who had a balance in his or her Stock Account on the record  date for such dividend. The number of units that shall be credited to the Stock Account of  such a Participant shall equal the number of shares of Common Stock, and fractions thereof,  which the Participant would have received as stock dividends had he or she been the owner  on the record date for such stock dividend of the number of shares of Common Stock equal  to the number of units credited to his or her Stock Account on such record date.    (d) Allocation of Dividends. To the extent required for bookkeeping purposes,  the allocation of additional units of Phantom Stock attributable to cash dividends or stock  dividends will be made to the Stock Sub-Account holding existing units to which the cash  dividend or stock dividend relates. For example, a Participant's 2012 Stock Sub-Account  will be credited with dividends attributable to units held in the 2012 Stock Sub-Account.  A Participant's 2013 Stock Sub-Account will be credited with dividends attributable to  units held in the 2013 Stock Sub-Account, and so on.    (e) Recapitalization. If, as a result of a recapitalization of the Corporation, the  outstanding shares of Common Stock shall be changed into a greater number or smaller  number of shares, the number of units of Phantom Stock credited to a Participant's Stock  Account shall be appropriately adjusted on the same basis.    7.5 Distributions.    (a) Distributions. Distributions from the Stock Account shall be made either in  cash or shares of Common Stock, as indicated by the Participant at least six months prior  to the scheduled distribution. Any fractional units shall be paid in cash. The number of  units to be distributed from a Participant's Stock Account shall be valued by multiplying  the number of such units of Phantom Stock by the Fair Market Value of the Common Stock  as of the business day immediately preceding the date such distribution is to occur.  The  

 

- 7 -   shares of Common Stock distributable to Non-Employee Directors under the Plan must be  previously issued and repurchased shares and may not be original issue shares.    (b) Timing. Distributions from a Participant's Stock Account shall commence  on the date the Participant selects on the initial Deferral Election Form. Any date selected  by the Participant must be at least two calendar years following the date of the initial  Deferral Election Form and will apply to all amounts (including future deferrals) held in  the Stock Account. In no event, however, shall a Participant's Account commence to be  distributed later than the first regular business day of the fourth month following the  Participant's death. If the Participant fails to designate a payment commencement date in  the Participant’s initial Deferral Election Form, the Participant's Stock Account shall  commence to be distributed no later than the first regular business day of the fourth month  following the Participant's Termination of Service.    (c) Optional Forms of Payment. Distributions from Participant Stock Accounts  (either in cash or in Common Stock) may be paid to the Participant either in a lump sum or  in a number of approximately equal annual installments designated by the Participant on  the Participant's initial Deferral Election Form. Such annual installments may be for 5  years, 10 years or 15 years. The method of payment (e.g., in lump sum or installments)  elected on the Participant's initial Deferral Election Form will apply to all amounts  (including future deferrals) held in the Stock Account. If a Participant elects to receive a  distribution of his or her Stock Account in cash installments, the Plan Administrator may  purchase an annuity from an insurance company which annuity will pay the Participant the  desired annual installments. If the Plan Administrator purchases an annuity contract, the  Non-Employee Director will have no further rights to receive payments from the  Corporation or the Plan with respect to the amounts subject to the annuity. If the Plan  Administrator does not purchase an annuity contract, the value of the Stock Account  remaining unpaid shall continue to receive allocations of dividends as provided in Section  7.4. If the Participant fails to designate a payment method in his or her initial Deferral  Election Form, the Participant's Stock Account shall be distributed in a lump sum.    (d) Irrevocable Elections. The payment commencement date pursuant to  Section 7.5(b) and the payment form pursuant to Section 7.5(c) elected or deemed elected  on the Participant's initial Deferral Election Form shall become irrevocable as of December  31 of the year immediately preceding the Service Year to which the Deferral Election Form  relates. A Participant's election of payment commencement date and payment form shall  be uniform for all years' Annual Retainer deferred under the Plan.    7.6 Change of Control. Notwithstanding any other provisions in the Plan, in the  event there is a Change of Control, (i) any Participant whose service is terminated on  account of such Change of Control shall receive an immediate lump sum payment of the  Participant's Stock Account balance, and (ii) any Participant who has commenced receiving  installment distributions from the Plan (other than from an annuity contract purchased from  an insurance company) shall immediately receive a lump sum payment in an amount equal  to the unpaid balance of the Participant’s Stock Account. A Participant's service shall be  considered  to  have  “terminated  on  account  of  such  Change  of  Control”  only  if the  

 

- 8 -   Participant's service on the Board is terminated without cause during the 24-month period  following the Change of Control.    7.7 Financial Hardship. The Committee may, in its sole discretion, accelerate  the making of payment to a Participant of an amount reasonably necessary to handle a  severe financial hardship of a sudden and unexpected nature due to causes not within the  control of the Participant. Such payment may be made even if the Participant has not  incurred a Termination of Service. All financial hardship distributions shall be made in  cash in a lump sum. Such payments will be made on a first-in, first-out basis so that the  oldest Annual Retainer deferred under the Plan shall be deemed distributed first in a  financial hardship. The Committee shall determine whether a financial hardship has  occurred in accordance with Section 1.409A-3(i)(3).    7.8 Application for Benefits. The Plan Administrator may require a Participant  or Beneficiary to complete and file certain forms as a condition precedent to receiving the  payment of benefits. The Plan Administrator may rely upon all such information given to  it, including the Participant's current mailing address. It is the responsibility of all persons  interested in receiving a distribution pursuant to the Plan to keep the Plan Administrator  informed of their current mailing addresses.    7.9 Responsibility for Investment Choices. Each Participant is solely  responsible for any decision to defer Annual Retainer into his or her Stock Account and  accepts all investment risks entailed by such decision, including the risk of loss and a  decrease in the value of the amounts he or she elects to defer into his or her Stock Account.    7.10 Funding. Deferred benefits under this Article 7 shall be paid from the  general assets of the Corporation or as otherwise directed by the Corporation. To the extent  that any Participant acquires the right to receive payments under the Plan (from whatever  source), such right shall be no greater than that of an unsecured general creditor of the  Corporation. Participants and their Beneficiaries shall not have any preference or security  interest in the assets of the Corporation other than as a general unsecured creditor.    ARTICLE 8  AMENDMENT AND TERMINATION    8.1 Amendment, Suspension or Termination.  The Committee may amend,  suspend or terminate the Plan, at any time and from time to time, without notice, to any  extent deemed advisable; provided, however, that (i), the Committee may condition any  amendment or modification on the approval of stockholders of the Corporation if such  approval is necessary or deemed advisable with respect to tax, securities or other  applicable laws, policies or regulations, and (ii) no such amendment or termination shall  (without the written consent of the Participant, if living, and if not, the Participant's  Beneficiary) adversely affect any benefit under the Plan which has accrued with respect to  the Participant or Beneficiary as of the date of such amendment or termination regardless  of whether such benefit is in pay status.  

 

- 9 -   ARTICLE 9  MISCELLANEOUS    9.1 Right to Service. Except as provided in the Plan, no Non-Employee Director  shall have any claim or right to be granted Shares under the Plan. Neither the Plan nor any  action pursuant thereto shall be construed as giving any Non-Employee Director a right to  be retained in the service of the Corporation. The adoption of this Plan shall not affect any  other compensation, retirement or other benefit plan or program in effect for the  Corporation.    9.2 Validity. In the event that any provision of the Plan is held to be invalid,  void or unenforceable, the same shall not affect, in any respect whatsoever, the validity of  any other provision of the Plan.    9.3 Inurement of Rights and Obligations. The rights and obligations under the  Plan and any related agreements shall inure to the benefit of, and shall be binding upon the  Corporation, its successors and assigns, and the Non-Employee Directors and their  beneficiaries.    9.4 Headings. Headings are provided herein for convenience only and are not  to serve as a basis for interpretation or construction of the Plan.    9.5 Governing Law. The Plan shall be construed, governed and enforced in  accordance with the law of Delaware, except as such laws are preempted by applicable  federal law.    9.6 Spendthrift Clause. None of the benefits, payments, proceeds or distribution  under the Plan shall be subject to the claim of any creditor of any Participant or Beneficiary,  or to any legal process by any creditor of such Participant or Beneficiary, and none of them  shall have any right to alienate, commute, anticipate or assign any of the benefits, payments,  proceeds or distributions under the Plan except to the extent expressly provided herein to  the contrary.    9.7 Merger. The Plan shall not be automatically terminated by the Corporation's  acquisition by, merger into, or sale of substantially all of its assets to any other organization,  but the Plan shall be continued thereafter by such successor organization. All rights to  amend, modify, suspend or terminate the Plan shall be transferred to the successor  organization, effective as of the date of the combination or sale.    9.8 Release. Any payment to Participant or Beneficiary, or to their legal  representatives, in accordance with the provisions of the Plan, shall to the extent thereof be  in full satisfaction of all claims hereunder against the Plan Administrator and the  Corporation, either of whom may require such Participant, Beneficiary, or legal  representative, as a condition precedent to such payment, to execute a receipt and release  therefor in such form as shall be determined by the Plan Administrator or the Corporation,  as the case may be.  

 

- 10 -   Name    (Label)    Mohawk Industries, Inc.  Non-Employee Director  Stock Compensation Plan  Cash/Shares Election Form    Personal Information  Name:     Home Address:     City: State: Zip Code:  Social Security Number:  Daytime Phone: Office Location:     Shares Election      ❑ I wish to receive 100% of my Annual Retainer for the calendar year in the form of shares of  Common Stock of Mohawk Industries, Inc. in accordance with the terms of the Plan.    ❑ I wish to receive 50% of my Annual Retainer for the calendar year in the form of shares of  Common Stock of Mohawk Industries, Inc. and 50% of my Annual Retainer for the calendar year in the  form of cash, in accordance with the terms of the Plan.  Signature  I have received and reviewed a summary of the Plan provisions, and I have a full understanding of the  benefits offered under the Plan. I further understand all the terms and conditions of participating in the  Plan and receiving benefits under the Plan. I understand that my election to receive Common Stock  under the Plan does not result in deferral of taxation to me and that I will have taxable income in the  calendar year for the value of the Common Stock so received. I also understand that I have been advised  to consult my own tax advisor about the advisability of my participation in the Plan and its tax effects.  I understand this Shares Election Form will remain in effect for future years until I either complete Cash  Election Form for a particular year, file a Deferral Election Form under the Plan, or revoke this Shares  Election Form.  Director Signature: Date:     To Be Completed By The Company  Effective Date: For the Plan Committee:       Make a copy of your completed form for your records  Director Signature:   Date:    

 

- 11 -   Name       (Label)  Mohawk Industries, Inc.  NON-EMPLOYEE DIRECTOR  STOCK COMPENSATION PLAN  DEFERRAL ELECTION FORM    PERSONAL INFORMATION  Name:     Home Address:     City: State: Zip Code:     Social Security Number:  Daytime Phone: Office Location:     DEFERRAL ELECTION  I wish to defer compensation under the Mohawk Industries, Inc. Non-Employee Director Stock Compensation Plan during the calendar year. I  understand that I may rescind this election form at any time during a calendar year with respect to deferrals for future calendar years, but that I may  not change this election form in any way once it becomes effective as of December 31 preceding the calendar year to which the deferral relates.    ❑ I wish to defer receiving the Annual Retainer I earn will earn during the calendar year, and to have such funds credited in the form  of units of Phantom Stock in my Stock Account under the Plan.  BENEFICIARY DESIGNATION  Upon my death, I understand that my account balance will be payable to my beneficiary in the payment method chosen on this form. I name the following  individual(s) (or trust) as my primary beneficiary(ies) and have stated the percentage payable (not to exceed 100% in total). In the event no primary  beneficiary survives me to receive my account balance, I name the following individual(s) (or trust) as my contingent beneficiary(ies) and have stated  the percentage payable (not to exceed 100% in total). Use separate page if you name more than two in each category. I also understand that I may have  only one beneficiary designation in effect for my entire benefit from the Plan, and that the beneficiary designation on this form revokes all prior  beneficiary designations I have made under the Plan.  PRIMARY BENEFICIARY  Name: Relationship to You:   Social Security Number:     Address:   Percentage Payable:     Name: Relationship to You:   Social Security Number:     Address:   Percentage Payable:  CONTINGENT BENEFICIARY  Name: Relationship to You:  Social Security Number:     Address:  Percentage Payable:     Name: Relationship to You:  Social Security Number:     Address:  Percentage Payable:     SIGNATURE  I have received and reviewed a summary of the Plan provisions, and I have a full understanding of the benefits offered under the Plan. I further  understand all the terms and conditions of participating in the Plan and receiving benefits under the Plan. I understand that my deferred  compensation may be forfeited in favor of the Company's creditors in the event of the Company's bankruptcy. While I understand that the Plan is  intended as a mechanism to allow me to defer compensation until I receive my deferral amounts, I also understand the Company does not guarantee  favorable tax consequences, and that I have been advised to consult my own tax advisor about the advisability of my participation in the Plan and its  tax effects.  I understand this Election Form will remain in effect for future years unless I revoke this Deferral Election Form.  Director Signature: Date:     TO BE COMPLETED BY THE COMPANY  Effective Date: For the Plan Committee:       IMPORTANT NOTE: The Length of Deferral and Payment Method election must be completed with your  Initial Election Form. Such elections will be irrevocable as of December 31 of the calendar year 

 

- 12 -   immediately preceding the calendar year in which the applicable Service Year commences. If you  fail to select a payment method, your entire Account balance will be paid in a single lump sum.    Do not complete this portion of the form if you have previously executed a Deferral Election Form.    LENGTH OF DEFERRAL  I wish to defer receiving this amount until (check one):  ❑    (this date must be at least two years from the date you sign this Deferral Election Form)*  ❑ The termination of my service as a director.  * Your Account will automatically be distributed on the first business day of the fourth month following your death.  PAYMENT METHOD  I wish to receive this deferral (check one):  ❑ in a lump sum ❑in installments over ‚ 5 years  10 years  15 years  Note: To receive a distribution in Common Stock from the Stock Account, you must notify the Committee at least six months prior to the  scheduled distribution date.  Make a copy of your completed form for your records  Director Signature:   Date:psn-ex1010_1101.htm

Exhibit 10.10

Amendments to Annual Incentive Plan 

PARSONS CORPORATION

ANNUAL INCENTIVE PLAN

 

 

 

 

 

 

 

 

 

 

 

Adopted January 1, 2012

Amended January 1, 2019

Amended January 1, 2020

Amended October 19, 2020

Amended January 1, 2022 

 

 

 
 
TABLE OF CONTENTS

 

	
Article 1
	
PREFACE1
	
 

	
 
	
Section 1.1
	
Effective Date and Term1
	
 

	
 
	
Section 1.2
	
Purpose of the Plan1
	
 

	
Article 2
	
DEFINITIONS1
	
 

	
Article 3
	
 annual INCENTIVE OPPORTUNITY TARGETS AND AWARDS2
	
 

	
 
	
Section 3.1
	
Authority of the Compensation Committee2
	
 

	
 
	
Section 3.2
	
Determination of Performance Criteria3
	
 

	
 
	
Section 3.3
	
Determination of Annual Incentive Opportunity Targets3
	
 

	
 
	
Section 3.4
	
Determination of Funding Target for the Annual Incentive Plan4
	
 

	
 
	
Section 3.5
	
Determination of Annual Incentive Award Pools4
	
 

	
 
	
Section 3.6
	
Determination and Approval of Annual Incentive Awards4
	
 

	
Article 4
	
FUNDING, PAYMENT AND RIGHTS OF PARTICIPANTS5
	
 

	
 
	
Section 4.1
	
Unfunded Plan5
	
 

	
 
	
Section 4.2
	
Payment of Annual Incentive Awards5
	
 

	
 
	
Section 4.3
	
Modification of Performance Standards5
	
 

	
Article 5
	
AMENDMENT AND TERMINATION OF THE PLAN5
	
 

	
Article 6
	
GENERAL PROVISIONS6
	
 

	
 
	
Section 6.1
	
Liability of Corporation6
	
 

	
 
	
Section 6.2
	
Liability of Administrators6
	
 

	
 
	
Section 6.3
	
Assignment and Alienation6
	
 

	
 
	
Section 6.4
	
Code Section 409A6
	
 

			
	
 
	
-i-
	
 

 

 

 
 
PARSONS CORPORATION
ANNUAL INCENTIVE PLAN

Parsons Corporation, a Delaware corporation with its principal place of business in California, hereby establishes and sets forth the terms and conditions of the Parsons Corporation Annual Incentive Plan (the “Plan”) for the benefit of eligible employees on the terms and conditions described hereinafter:

Article 1
PREFACE

Section 1.1Effective Date and Term.  The Plan shall be effective on January 1, 2012, and shall continue in force and effect until terminated by the Board.

Section 1.2Purpose of the Plan.  The Plan is intended to encourage participating key employees of the Corporation to remain in its employ and to motivate such participants to exert maximum effort to achieve the Corporation’s goals.

Article 2
DEFINITIONS

The words and phrases identified in quotation marks below, when used in the Plan and related documents, shall have the meanings set forth in this Article 2, unless the context clearly indicates otherwise.

(a)The “Compensation Committee” means the Compensation Committee of the Board.

(b)The “Total Rewards Committee” means the committee composed of the CEO and other executives named by the CEO to review and approve Annual Incentive Awards for Participants below the level of those required to be reviewed by the Compensation Committee.

(c)“Board” means the Board of Directors of Parsons Corporation.

2

 

 

 
 
(d)“Corporation” means Parsons Corporation and any of its subsidiary companies of any tier.

(e)“Participant” means each employee of the Corporation selected to participate in the Plan for each Performance Cycle.

(f)“Performance Cycle” means a fiscal year of the Corporation.

(g)“Plan” means the Parsons Corporation Annual Incentive Plan.

(h)“Annual Incentive Opportunity Target” means the target value of the incentive which could potentially be earned by an eligible Participant in respect of a Performance Cycle.

(i)“Annual Incentive Award” means the value of the cash incentive payment earned by an eligible Participant under the Plan in respect of a completed Performance Cycle.

(j)“Incentive Award Pools” means the amount of cash available to pay Annual Incentive Awards earned under the Plan as determined pursuant to Section 3.5.

(k)“Retire” or “Retirement” means a Participant's voluntary termination of employment from the Corporation or its subsidiary after having attained age 62 or older.  

(l)“Disability” means the Participant has been determined by the Social Security Administration as eligible for Social Security disability benefits.  

(m)“Eligible Employee” means active full-time or part-time employees of the Corporation with a minimum of 17.5 weekly scheduled hours, but excludes any Employee who is on a leave of absence for the entire Performance Cycle.

(n)“Base Salary” means, for full-time employees, the annual base salary in effect on the last day of the fiscal year; and for part-time employees, the base hourly rate in effect on the last day of the fiscal year, multiplied by the number of hours for which they received hourly compensation (including hours charged to holiday and paid time off).

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Article 3
ANNUAL INCENTIVE OPPORTUNITY TARGETS AND AWARDS 

Section 3.1Authority of the Compensation Committee.  With respect to the Plan, the Compensation Committee shall in its discretion:

(a)Determine the funding level of any Incentive Award Pool for Participants,

(b)Determine the Annual Incentive Opportunity Target and Annual Incentive Award for the CEO,

(c)Review and approve the Annual Incentive Opportunity Targets and Annual Incentive Awards recommended by the CEO for Presidents and other key officers designated by the Compensation Committee for review and approval,

(d)Delegate to the Total Rewards Committee the authority to determine Annual Incentive Opportunity Targets and Annual Incentive Awards for all other participants in the Plan,

(e)Make all other determinations and take all other actions as may be necessary, appropriate or advisable for the administration of the Plan, to the extent not delegated to the Total Rewards Committee.

Section 3.2Determination of Performance Criteria.  At the beginning of the Performance Cycle, the Compensation Committee shall confirm performance criteria consistent with the business plan approved by the Board.  Performance criteria may be expressed in terms of overall financial and operational results of the Corporation or such other measurement as the Board or Compensation Committee may determine in its discretion.  Individual performance goals for each Participant are set and communicated as follows:

(a)The CEO communicates performance goals in writing to Participants who report to the CEO.

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(b)Performance goals are communicated to Participants as and when administratively feasible following approval of performance criteria at the meeting of the Compensation Committee nearest the beginning of the Performance Cycle.

Section 3.3Determination of Annual Incentive Opportunity Targets.   The amount of a Participant’s Annual Incentive Opportunity Target may be expressed as a fixed value or as a percent of base salary, or as a range of opportunity with a minimum threshold, a target and a maximum award opportunity.  In some instances, a Participant may be advised that the amount of any future incentive award will be discretionary and that the Participant will not have any Annual Incentive Opportunity Target.  A Participant may earn an Annual Incentive Award in excess of the amount of the Annual Incentive Opportunity Target.  Annual Incentive Opportunity Targets may be established based on relative levels of responsibility, position and impact on financial and operating results, competitive practice, management discretion or any other applicable factor.  The Compensation Committee reviews and approves Annual Incentive Opportunity Targets for those senior executives whose targets and awards are subject to Compensation Committee approval.  The CEO reviews and approves Annual Incentive Opportunity Targets proposed by Participants who report to the CEO for Participants in their organizations. 

Section 3.4Determination of Funding Target for the Annual Incentive Plan.  At the beginning of the Performance Cycle, funding at target  for the Annual Incentive Plan is reviewed and approved by the Compensation Committee.  The Corporation accrues for the potential liability for funding the Incentive Award Pools, making adjustments during the course of the year based on the actual financial performance of the Corporation or on guidance provided by CEO, Chief Financial Officer or the Compensation Committee.

Section 3.5Determination of Annual Incentive Award Pools.  At the first meeting of the Compensation Committee following the end of the Performance Cycle, where the year-end financial and operating performance of the Corporation is available, the Committee shall review the performance against the criteria originally approved by the Committee or criteria pursuant to a revised business plan.   The Incentive Award Pools recommended for the Annual Incentive Plan  are reviewed and approved by the Compensation Committee.  If the 

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performance of the Corporation falls short of the performance criteria established at the beginning of the Performance Cycle, the Compensation Committee has the authority to establish an adjusted Incentive Award Pool to fund discretionary awards to Participants whose individual performance merits consideration.

Section 3.6Determination and Approval of Annual Incentive Awards.  Following the end of the Performance Cycle and in conjunction with the approval of the Incentive Award Pools, the Compensation Committee reviews the performance of the Corporation and determines the amount of the Annual Incentive Award, if any, earned by the CEO.  The CEO recommends Annual Incentive Awards for senior officers designated for review and approval by the Compensation Committee, and then the Compensation Committee determines the amount of Annual Incentive Awards, if any, earned by such officers.  Such determination may include discretionary consideration for factors other than those performance criteria outlined in the performance goals at the beginning of the performance period.  For all others, Annual Incentive Award exception recommendations are reviewed and approved by the Total Rewards Committee prior to scheduled payment of Annual Incentive Awards. 

Section 3.7Proration of Awards.  Payment of any Annual Incentive Award earned by a Participant are subject to proration as follows:

(a)If an individual becomes an Eligible Employee and a Participant in the Plan, due to hire or a change in job after the beginning of the Performance Cycle, their Annual Incentive Award will be prorated by multiplying the amount of their Annual Incentive Award by a fraction, the numerator of which is the number of calendar days during which employee was actively employed as a full-time or part-time employee and a Participant in the Plan during the applicable Performance Cycle, and the denominator is the total number of calendar days in that Performance Cycle.

(b)If a Participant’s Annual Incentive Opportunity Target is expressed as a percent of base salary and is adjusted during the Performance Cycle, the Participant’s award will prorated as follows, unless the Committee expressly determines otherwise:

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(i)By multiplying the Participant’s applicable base salary by a fraction, the numerator of which is the number of calendar days during which the initial Annual Incentive Opportunity Target was in effect and the denominator is the total number of days in that Performance Cycle; and then multiplying that amount by the initial Annual Incentive Opportunity Target; and

(ii)By multiplying the Participant’s applicable base salary by a fraction, the numerator of which is the number of calendar days during which the adjusted Annual Incentive Opportunity Target was in effect and the denominator is the total number of days in that Performance Cycle; and then multiplying that amount by the adjusted Annual Incentive Opportunity Target; and 

(iii)Finally, by adding the amounts calculated in sections (i) and (ii) above.

(c)If a Participant is on a leave of absence for more than twelve (12) weeks during the Performance Cycle, their Annual Incentive Award may be prorated, in the Committee’s sole discretion, by multiplying the amount of the their Annual Incentive Award by a fraction, the numerator of which is the number of calendar days during which employee was actively employed as a full-time or part-time employee (and not on leave of absence) during the applicable Performance Cycle, and the denominator is the total number of calendar days in that Performance Cycle. 

Article 4
FUNDING, PAYMENT AND RIGHTS OF PARTICIPANTS

Section 4.1Unfunded Plan.  The Plan is an unfunded, nonqualified plan.  The benefits provided under the Plan shall be payable by the Corporation from its general assets.

Section 4.2Payment of Annual Incentive Awards.  Payment of any Annual Incentive Award earned by a Participant shall be made in one payment occurring between the 1st of January and the 30th of April of the calendar year following the Performance Cycle, provided the Participant has been a Participant for a full fiscal quarter during the Performance Cycle and is employed as a 

7

 

 

 
 
regular employee by the Corporation at the time of payment.  This requirement for continued employment at the time of payment will be waived in the event of;

	
 
	
a)
	
Retirement, Disability, or death of the Participant prior to the scheduled payment date, and shall be prorated, as applicable,  by multiplying the amount of the Participant’s Annual Incentive Award by a fraction, the numerator of which is the number of calendar days during which the Participant was actively employed as a full-time or part-time regular employee during the applicable Performance Cycle, and the denominator is the total number of calendar days in that Performance Cycle.

	
 
	
b)
	
Involuntary termination for reason other than performance, misconduct, or change in control, with effect on or after the first day of the fourth fiscal quarter through the scheduled payment date, and shall be prorated, as applicable,  by multiplying the amount of the Participant’s Annual Incentive Award by a fraction, the numerator of which is the number of calendar days during which the Participant was actively employed as a full-time or part-time regular employee during the applicable Performance Cycle, and the denominator is the total number of calendar days in that Performance Cycle.

	
 
	
c)
	
In the case of special circumstances as determined by the Committee.   

The payment of any Annual Incentive Awards earned by selected Participants may be eligible for deferral under the terms of the Corporation’s deferred compensation plans as in effect from time to time.

Section 4.3Modification of Performance Standards.  If, prior to completion of a Performance Cycle, the Board determines, in its absolute and complete discretion, that the established performance measures or objectives are no longer applicable, the Compensation Committee may modify the performance measures and standards in a manner that it considers to be appropriate and equitable. 

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Article 5
AMENDMENT AND TERMINATION OF THE PLAN

The Compensation Committee will review the Plan, at a minimum, once every five years.

The Board at any time and from time to time may suspend, terminate, modify, or amend the Plan.

Article 6
GENERAL PROVISIONS

Section 6.1Liability of Corporation.  Nothing in the Plan shall constitute the creation of a trust or other fiduciary relationship between the Corporation and any Participant, beneficiary or other person.  The Corporation shall not be considered a trustee by reason of the Plan.

Section 6.2Liability of Administrators.  No member of the Board, the Compensation Committee, the Total Rewards Committee, or the CEO or any other person with administrative responsibility under the Plan will be personally liable for any action taken or determination made in good faith with respect to the Plan, its interpretation, management or administration or any Annual Incentive Award granted hereunder.

Section 6.3Assignment and Alienation.  No rights under the Plan may be anticipated, assigned, transferred, alienated, pledged, sold, attached, garnished or encumbered by a Participant or beneficiary.

Section 6.4Code Section 409A.  It is intended that any amounts payable under this Plan shall either be exempt from Code Section 409A or shall comply with Code Section 409A (including Treasury Regulations and other published guidance related thereto) so as not to subject Participants to payment of any additional tax, penalty, or interest imposed under Code Section 409A.  The provisions of this Plan shall be construed and interpreted to avoid the imputation of any such additional tax, penalty, or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefits payable to Participants.

 

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END

 

 

 

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