Exhibit No. 10.17
Certain information has been excluded from this exhibit because it is not material and would likely cause competitve harm to the company if publicly disclosed. Redacted information is indicated by brackets.
Consolidated Form of Long-Term Performance-Based Restricted Stock Unit Grant
Company Confidential | ARMSTRONG WORLD INDUSTRIES 2500 Columbia Ave., P.O. Box 3001 Lancaster, PA 17604 717. 397.0611 |
First Name | Middle Name Last Name |
I am pleased to inform you that the Company’s Management Development and Compensation Committee granted you the following:
Date of Grant: | [Grant Date] |
Performance Units (“Target Award”): | [Number of Shares Granted] |
Performance Period (“Performance Period”): | [Performance Period] |
This award recognizes the importance of your role in achieving the Company’s long-term strategy and is subject to the terms of the Equity and Cash Incentive Plan (“Plan”) and the award agreement (the Plan, this grant letter, the Performance Goals attached as Exhibit A, the Terms and Conditions attached as Exhibit B (including Attachment 1), and your acceptance (if any) together constitute the “Award Agreement”).
The Performance Units will be earned by achieving a Performance Goal based on Cumulative Free Cash Flow, subject to your continued employment through the end of the Performance Period. The Committee has established the Performance Goal set forth on Exhibit A, which allows you to earn up to [∙]% of the Target Award, if you remain continuously employed by the Employer through the end of the Performance Period.
To the extent the Performance Goal is achieved and you satisfy the employment requirements, a number of shares of Company Stock equal to the Performance Units that are earned and vested will be distributed to you following the conclusion of the Performance Period in accordance with the payment terms set forth in the Terms and Conditions. The Company will withhold shares to satisfy your tax obligations unless you provide a payment to cover the tax withholding obligation. You have no ownership or voting rights relative to the Performance Units.
If the Company makes cash dividend payments during the Performance Period, the value of the dividends on shares attributable to the Performance Units will accrue as dividend equivalents in a non-interest bearing bookkeeping account. You will receive a cash payment equal to the accrued dividend equivalents at the end of the Performance Period, adjusted for the number of Performance Units that become earned and vested.
Employment Events
The following chart is a summary of the provisions which apply to this award in connection with termination of employment. The following is only a summary, and in the event of termination of employment, the award will be governed by the Terms and Conditions.
Event | Provisions |
▪ Voluntary Resignation ▪ Termination for Cause | All Performance Units and accrued dividend equivalents are forfeited. |
▪ “55 / 5” Rule Termination (55 years of age or older with 5 years of service) ▪ Involuntary Termination Without Cause | If termination occurs after 10 months following the Date of Grant, then to the extent that the Performance Goal is achieved for the Performance Period, Performance Units and accrued dividend equivalents are earned and vested pro-rata, based on the period of employment; otherwise the Performance Units and accrued dividend equivalents are forfeited. |
▪ Death ▪ Long-Term Disability | To the extent that the Performance Goal is achieved for the Performance Period, Performance Units and accrued dividend equivalents are earned and vested pro-rata, based on the period of employment. |
After a Change in Control: ▪ Involuntary Termination Without Cause ▪ Death ▪ Long-Term Disability | Upon a Change in Control Performance Units and accrued dividend equivalents are earned as described in Exhibit A and will vest as described in Exhibit B. |
In the event of any inconsistency between the foregoing summary and the Terms and Conditions or the Plan, the Terms and Conditions or the Plan, as applicable, will govern. Capitalized terms used but not defined in this grant letter will have the meanings set forth in the Plan or the Terms and Conditions, as applicable. As described in the Terms and Conditions, if and to the extent that the terms of this Award Agreement conflict with the terms of a severance agreement or employment agreement between you and the Company, the terms of this Award Agreement shall supersede the terms of the severance agreement or employment agreement.
Please note that the Terms and Conditions contain restrictive covenants pertaining to confidentiality, non-competition and non-solicitation. You should read these sections carefully before deciding whether to accept the Performance Units. You have the right to consult with counsel prior to accepting the Performance Units. If you decide not to accept the Performance Units, you will not be subject to the restrictive covenants set forth in the Terms and Conditions, but you will forfeit the Performance Units. You will continue to be subject to any restrictive covenants set forth in the Plan with respect to prior equity grants and any other agreements between you and the Company. There will be no other consequences as a result of your decision not to accept the Performance Units.
Please contact Cindy Gegg (717-396-2570) if you have questions.
By my signature below as a duly authorized officer of the Company, the Company has caused this Award Agreement to be executed, effective as of the Date of Grant listed above and subject to your electronic signature indicating your acceptance.
Sincerely,
[Name]
[Title]
The information contained in this letter is confidential and any discussion, distribution or use of this information is prohibited.
Performance Goal
Mineral Fiber Volume: Total square feet of Mineral Fiber products sold, as determined by the Committee.
For purposes of the Mineral Fiber Volume calculation:
Mineral Fiber Volume | ||
Mineral Fiber Volume (Million Sq. Ft. in [Year]) | CAGR (against [Year] Mineral Fiber Volume) | Payout |
Below [∙]% | Less than [∙]% | 0% |
[∙]% | [∙]% | [∙]% |
[∙]% | [∙]% | [∙]% |
[∙]% | [∙]% | [∙]% |
[∙]% | [∙]% | [∙]% |
[∙]% | [∙]% | [∙]% |
Mineral Fiber Volume is measured based on the Mineral Fiber Volume growth during the Performance Period, as calculated by Mineral Fiber Volume for calendar year [Year] as compared to Mineral Fiber Volume for calendar year [Year]. The performance levels set forth above are with respect to Mineral Fiber Volume for calendar year [Year]. Threshold level performance must be achieved in order to earn any Performance Units for the Performance Goal. If actual performance is between performance levels, the number of Performance Units earned with respect to the Performance Goal will be interpolated on a straight line basis for pro-rata achievement for performance at or between performance levels. If the Performance Goal would produce fractional units, the number of Performance Units earned shall be rounded up to the nearest whole unit, but not in excess of an aggregate of [∙]% of the Target Award.
Change in Control:
If a Change in Control occurs prior to the end of the Performance Period, the number of Performance Units earned with respect to the Mineral Fiber Volume Performance Goal will be the greater of (i) the Target Award or (ii) the number of Performance Units earned with respect to the Mineral Fiber Volume Performance Goal as calculated by the actual Mineral Fiber Volume for the immediately preceding 12 month period of the Performance Period (or an annualized volume calculation, if such period is less than 12 months) prior to the date of the Change in Control based on the CAGR achievement rate implied as of such date, as determined by the Committee before the Change in Control in its sole discretion. The Committee reserves discretion to provide for accelerated vesting of the earned Performance Units at a higher performance level pursuant to Section 14(b) of the Plan.
EXHIBIT A
Performance Goal
Cumulative Free Cash Flow: Cumulative Free Cash Flow is defined as cash flow from operations, minus (i) cash payments to purchase property, plant and equipment (Cap Ex), plus (ii) the return of investment from the Worthington Armstrong Venture (WAVE), as determined by the Committee.
Cumulative Free Cash Flow Performance Scale |
| ||||
Cumulative Free Cash Flow ($) |
| Performance Level |
| Payout | |
Below [∙]% |
| Below [∙]% of Target Performance |
| 0% | |
[∙]% |
| [∙]% of Target Performance |
| [∙]% | |
[∙]% |
| Target Performance |
| [∙]% | |
[∙]% |
| [∙]% of Target Performance |
| [∙]% | |
[∙]% |
| [∙]% of Target Performance |
| [∙]% | |
[∙]% |
| [∙]% of Target Performance or greater |
| [∙]% |
Cumulative Free Cash Flow is measured based on the Cumulative Free Cash Flow during the Performance Period. Threshold level performance must be achieved in order to earn any Performance Units for the Performance Goal. If actual performance is between performance levels, the number of Performance Units earned with respect to the Performance Goal will be interpolated on a straight line basis for pro-rata achievement for performance at or between performance levels. If the Performance Goal would produce fractional units, the number of Performance Units earned shall be rounded up to the nearest whole unit, but not in excess of an aggregate of [∙]% of the Target Award.
Change in Control:
If a Change in Control occurs prior to the end of the Performance Period, the number of Performance Units earned with respect to the Cumulative Free Cash Flow Performance Goal will be the greater of (i) the Target Award or (ii) the number of Performance Units earned with respect to the Cumulative Free Cash Flow Performance Goal based on actual Cumulative Free Cash Flow through the date of the Change in Control relative to the [Year], [Year] and [Year] portions of the total Cumulative Free Cash Flow target, as determined by the Committee before the Change in Control in its sole discretion. Cumulative Free Cash Flow through the date of the Change in Control shall be compared to the annual and quarterly targets for the period through the date of the Change in Control.
The Committee reserves discretion to provide for accelerated vesting of the earned Performance Units at a higher performance level pursuant to Section 14(b) of the Plan.
EXHIBIT A
Performance Goal
Absolute Total Shareholder Return: Absolute Total Shareholder Return (“Absolute TSR”) tracks the appreciation in share price of the Company Stock, including dividends, and is annualized for the Performance Period, as determined by the Committee. Specifically, Absolute TSR is calculated based on the following formula:
Ending Share Price + Aggregate Dividends ^(1/3) - 1 Starting Share Price |
For purposes of the Absolute TSR calculation:
Absolute TSR | ||
Performance Level |
| Payout |
Below [∙]% |
| 0% |
[∙]% |
| [∙]% |
[∙]% |
| [∙]% |
[∙]% |
| [∙]% |
[∙]% |
| [∙]% |
[∙]% |
| [∙]% |
[∙]% |
| [∙]% |
Threshold level performance must be achieved in order to earn any Performance Units for the Performance Goal. If actual performance is between performance levels, the number of Performance Units earned with respect to the Performance Goal will be interpolated on a straight line basis for pro-rata achievement for performance at or between performance levels. If the Performance Goal would produce fractional units, the number of Performance Units earned shall be rounded up to the nearest whole unit, but not in excess of an aggregate of [∙]% of the Target Award.
Change in Control:
If a Change in Control occurs prior to the end of the Performance Period or prior to the end of the 60 trading day period following the end of the Performance Period, the number of Performance Units earned with respect to the Absolute TSR Performance Goal will be the greater of (i) the Target Award or (ii) the number of Performance Units earned with respect to the Absolute TSR Performance Goal based on Absolute TSR through the date of the Change in Control, calculated by using the per-share sales price in the Change in Control as the Ending Share Price and as if the Change in Control date were the end of the Performance Period, as determined by the Committee before the Change in Control in its sole discretion.
The Committee reserves discretion to provide for accelerated vesting of the earned Performance Units at a higher performance level pursuant to Section 14(b) of the Plan.
EXHIBIT B
ARMSTRONG WORLD INDUSTRIES, INC.
EQUITY AND CASH INCENTIVE PLAN
PERFORMANCE RESTRICTED STOCK UNIT GRANT
TERMS AND CONDITIONS
* * *
Attachment 1
Definitions
For purposes of the Grant Letter and Grant Conditions, the following terms have the meanings ascribed to them on this Attachment 1:
Notwithstanding the foregoing, if the Grantee is employed or provides services in Colorado, subsections (iii) and (iv)(A) above shall be limited to actions taken by the Grantee through the use of Company trade secrets and/or confidential information.
Notwithstanding the foregoing, if the Grantee is employed or provides services in California, or in another jurisdiction where the provisions of subsections (iii) and (iv)(A) above are otherwise prohibited by law, the following provisions shall apply instead of subsections (iii) and (iv)(A) above:
iii. During the Grantee’s employment or service with the Employer, the Grantee engages in any Restricted Business or enters into any employment relationship with a Restricted Business; or
iv. During the Grantee’s employment or service with the Employer, and for a period of two (2) years thereafter:
A. The Grantee, directly or indirectly, solicits or attempts to solicit any business from any of customers of the Employer for the purposes of providing products or services that are competitive with those provided by the Employer where such solicitation and/or attempt at solicitation is done by the Grantee through the use of Company trade secrets and/or confidential information.