Attached files
file | filename |
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EXCEL - IDEA: XBRL DOCUMENT - PIEDMONT NATURAL GAS CO INC | Financial_Report.xls |
10-Q - FORM 10-Q - PIEDMONT NATURAL GAS CO INC | g27410e10vq.htm |
EX-31.2 - EX-31.2 - PIEDMONT NATURAL GAS CO INC | g27410exv31w2.htm |
EX-31.1 - EX-31.1 - PIEDMONT NATURAL GAS CO INC | g27410exv31w1.htm |
EX-32.2 - EX-32.2 - PIEDMONT NATURAL GAS CO INC | g27410exv32w2.htm |
EX-32.1 - EX-32.1 - PIEDMONT NATURAL GAS CO INC | g27410exv32w1.htm |
EX-10.3 - EX-10.3 - PIEDMONT NATURAL GAS CO INC | g27410exv10w3.htm |
EX-10.2 - EX-10.2 - PIEDMONT NATURAL GAS CO INC | g27410exv10w2.htm |
Exhibit 10.1
PIEDMONT NATURAL GAS COMPANY, INC.
INCENTIVE COMPENSATION PLAN
INCENTIVE COMPENSATION PLAN
As Amended and Restated
Effective December 15, 2010
Effective December 15, 2010
TABLE OF CONTENTS
Page | ||||
ARTICLE I PURPOSE |
1 | |||
ARTICLE II DEFINITIONS |
1 | |||
2.1 Agreement |
1 | |||
2.2 Annual Incentive Award |
1 | |||
2.3 Award |
1 | |||
2.4 Award Date or Grant Date |
1 | |||
2.5 Board or Board of Directors |
1 | |||
2.6 Cashless Exercise |
1 | |||
2.7 Cause |
1 | |||
2.8 Change in Control |
1 | |||
2.9 Code |
1 | |||
2.10 Committee |
2 | |||
2.11 Common Stock or Stock |
2 | |||
2.12 Company |
2 | |||
2.13 Covered Participant |
2 | |||
2.14 Designated Beneficiary |
2 | |||
2.15 Disability |
2 | |||
2.16 Effective Date |
2 | |||
2.17 Eligible Employee |
2 | |||
2.18 Employee |
2 | |||
2.19 Exchange Act |
2 | |||
2.20 Fair Market Value |
2 | |||
2.21 Good Reason |
2 | |||
2.22 Incentive Stock Option |
3 | |||
2.23 Non-qualified Stock Option |
3 | |||
2.24 Option Price |
3 | |||
2.25 Outside Director |
3 | |||
2.26 Participant |
3 | |||
2.27 Participating Company |
3 | |||
2.28 Performance Award |
3 | |||
2.29 Performance Criteria |
3 | |||
2.30 Performance Period |
3 | |||
2.31 Performance Share or Performance Unit |
3 | |||
2.32 Person |
3 | |||
2.33 Plan |
3 | |||
2.34 Restricted Stock |
3 | |||
2.35 Restriction Period |
3 | |||
2.36 Retirement |
4 | |||
2.37 Rule 16b-3 |
4 | |||
2.38 Section 162(m) |
4 | |||
2.39 Securities Act |
4 | |||
2.40 Shares |
4 | |||
2.41 Stock Appreciation Right |
4 | |||
2.42 Stock Option or Option |
4 | |||
2.43 Stock Unit Award |
4 |
Page | ||||
2.44 Subsidiary |
4 | |||
ARTICLE III ELIGIBILITY |
4 | |||
ARTICLE IV SHARES SUBJECT TO THE PLAN |
5 | |||
4.1 Number of Shares |
5 | |||
4.2 Share Counting |
5 | |||
4.3 Capital Adjustments |
5 | |||
ARTICLE V STOCK OPTIONS |
5 | |||
5.1 Grant of Stock Options |
5 | |||
5.2 Option Price |
6 | |||
5.3 Exercisability |
6 | |||
5.4 Method of Exercise |
6 | |||
5.5 Death, Disability, Retirement or Other Termination of Employment |
6 | |||
ARTICLE VI RESTRICTED STOCK |
7 | |||
6.1 Grant of Restricted Stock |
7 | |||
6.2 Restricted Stock Award Agreement |
7 | |||
6.3 Restriction Period |
7 | |||
6.4 Removal of Restrictions |
7 | |||
6.5 Voting Rights |
7 | |||
6.6 Dividends and Other Distributions |
7 | |||
6.7 Death, Disability or Retirement |
7 | |||
ARTICLE VII OTHER STOCK BASED AWARDS |
8 | |||
7.1 Grant of Other Stock Based Awards |
8 | |||
7.2 Stock Appreciation Rights |
8 | |||
7.3 Performance Awards |
8 | |||
7.4 Stock Unit Awards |
10 | |||
ARTICLE VIII ANNUAL INCENTIVE AWARDS |
11 | |||
8.1 Timing and Determination of Annual Incentive Awards |
11 | |||
8.2 Performance Criteria for Annual Incentive Awards |
11 | |||
8.3 Maximum Annual Incentive Award |
11 | |||
8.4 Short Performance Period |
12 | |||
8.5 Limitation on Right to Payment of Award |
12 | |||
ARTICLE IX SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS |
13 | |||
ARTICLE X CHANGE IN CONTROL |
14 | |||
10.1 Acceleration upon a Change in Control |
14 | |||
10.2 Change in Control Defined |
14 | |||
10.3 Good Reason Defined |
16 | |||
10.4 Cause Defined |
17 | |||
ARTICLE XI ADMINISTRATION |
18 | |||
11.1 The Committee |
18 |
ii
Page | ||||
11.2 Committee Decisions |
18 | |||
11.3 Rule 16b-3 and Section 162(m) Requirements |
18 | |||
ARTICLE XII GENERAL PROVISIONS |
18 | |||
12.1 Withholding |
18 | |||
12.2 Code Section 409A |
18 | |||
12.3 Terms of Awards |
19 | |||
12.4 Recoupment of Awards |
19 | |||
12.5 Forfeiture of Awards for Engaging in Competition |
19 | |||
12.6 Change in Position |
20 | |||
12.7 Non-transferability |
20 | |||
12.8 No Right to Employment |
20 | |||
12.9 Rights as Shareholder |
20 | |||
12.10 Construction of the Plan |
20 | |||
12.11 Amendment of Plan or Awards |
20 | |||
12.12 Exclusion from Computation of Compensation for Other Purposes |
20 | |||
12.13 Legend |
21 | |||
12.14 Special Provisions for Certain Participants |
21 | |||
12.15 Unfunded Plan |
21 | |||
12.16 Conflict with Employment Agreement |
21 | |||
12.17 Gender and Number |
21 | |||
12.18 Severability |
21 | |||
12.19 Effect of Headings |
21 | |||
12.20 No Liability |
21 | |||
12.21 Limited Effect of Plan Restatement |
22 |
iii
ARTICLE I
PURPOSE
PURPOSE
The Company adopted the Piedmont Natural Gas Company, Inc. Incentive Compensation Plan
effective November 1, 2005 to promote the interests of the Company and its shareholders through (a)
the attraction and retention of Participants essential to the success of the Company; (b) the
motivation of Participants using performance-related incentives linked to performance goals and the
interests of Company shareholders; and (c) enabling such individuals to share in the growth and
success of the Company and its Subsidiaries. The Plan permits the grant of Annual Incentive
Awards, Performance Shares, Restricted Stock and other forms of stock-based awards as the
Committee, in its sole and complete discretion, may determine to be appropriate to carry out the
intent and purposes of this Plan. The Companys shareholders approved the Plan on March 3, 2006.
Effective as of December 15, 2010, subject to approval by the Companys shareholders at the
Companys 2011 annual meeting of shareholders, the Plan is amended and restated as set forth in
this instrument.
ARTICLE II
DEFINITIONS
DEFINITIONS
2.1 Agreement shall mean a written agreement between the Company and a Participant
implementing an Award and setting forth the particular terms, conditions and restrictions of the
Award. With respect to the grant of a Stock Option, the Agreement may be referred to herein as an
Option Agreement, and with respect to any other Award hereunder, the Agreement may be
referred to herein as an Award Agreement.
2.2 Annual Incentive Award shall mean a cash bonus payable to a Participant under
Article VIII.
2.3 Award shall mean an award or grant made to a Participant under Article V, VI, or
VII, or an Annual Incentive Award under Article VIII.
2.4 Award Date or Grant Date shall mean the date on which an Award is made
by the Committee.
2.5 Board or Board of Directors shall mean the Board of Directors of the
Company.
2.6 Cashless Exercise shall mean the exercise of an Option by a Participant through
the use of a brokerage firm to make payment to the Company of the exercise price from the proceeds
of the sale of Stock issued pursuant to the exercise of the Option, and upon receipt of such
payment, the Companys delivery of the exercised Shares to the brokerage firm.
2.7 Cause shall be defined in Section 10.4.
2.8 Change in Control shall be defined in Section 10.2.
2.9 Code shall mean the Internal Revenue Code of 1986 and the rules and regulations
promulgated thereunder, or any successor law, as amended from time to time.
2.10 Committee shall mean the Compensation Committee of the Board or such other
committee appointed by the Board to administer the Plan in accordance with Article XI.
2.11 Common Stock or Stock shall mean the common stock, no par value, of
the Company, or such other security or right or instrument into which such common stock may be
changed or converted in the future.
2.12 Company shall mean Piedmont Natural Gas Company, Inc., a North Carolina
corporation, or any successor thereto.
2.13 Covered Participant shall mean a Participant who is a covered employee as
defined in Code Section 162(m)(3).
2.14 Designated Beneficiary shall mean the beneficiary designated by the
Participant, pursuant to procedures established by the Committee, to receive amounts due to the
Participant in the event of the Participants death. If the Participant does not make an effective
designation, then the Designated Beneficiary will be the Participants estate.
2.15 Disability shall mean (a) the mental or physical disability of the Participant
defined as Disability under the terms of the long-term disability plan sponsored by the Company
and in which the Participant is covered, as amended from time to time in accordance with the
provisions of such plan; or (b) a determination by the Committee, in its sole discretion, of total
disability (based on medical evidence) that precludes the Participant from engaging in any
occupation or employment for wage or profit for at least twelve months and appears to be permanent.
All decisions by the Committee relating to a Participants Disability (including a decision that a
Participant is not disabled) shall be final and binding on all parties.
2.16 Effective Date of this amended and restated Plan shall mean December 15, 2010,
subject to approval by the Companys shareholders at the Companys 2011 annual meeting of
shareholders.
2.17 Eligible Employee shall mean an Employee who is an officer or other key
employee of a Participating Company as designated by the Committee to be eligible to participate in
the Plan.
2.18 Employee shall mean an individual who is employed by a Participating Company in
a customary employer-employee relationship and designated as such in accordance with the Companys
standard employment practices.
2.19 Exchange Act shall mean the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder, or any successor law, as amended from time to time.
2.20 Fair Market Value shall mean, for any given date, the closing price of Common
Stock as reported on the composite tape of the primary stock exchange in which the Common Stock is
listed on the immediately preceding day or, if no Shares were traded on such stock exchange on such
day, then on the next preceding day that Stock was traded on such exchange, all as reported by The
Wall Street Journal or such other source as the Committee may select.
2.21 Good Reason shall be defined in Section 10.3.
2
2.22 Incentive Stock Option shall mean an option to purchase Stock, granted under
Article V, which is designated as an incentive stock option and is intended to meet the
requirements of Code Section 422.
2.23 Non-qualified Stock Option shall mean an option to purchase Stock, granted
under Article V, which is not intended to qualify as an Incentive Stock Option.
2.24 Option Price shall mean the exercise price per share of Stock covered by an
Option in accordance with Section 5.2.
2.25 Outside Director shall mean a member of the Board who is not an Employee.
2.26 Participant shall mean an Eligible Employee or Outside Director who has been
selected from time to time under Article III to receive an Award under the Plan.
2.27 Participating Company shall mean the Company and such other Subsidiaries as the
Board authorizes to participate herein.
2.28 Performance Award shall mean a performance-based Award made under Section 7.3,
which may be in the form of either Performance Shares or Performance Units.
2.29 Performance Criteria shall mean objectives established by the Committee for a
Performance Period for the purpose of determining when an Award subject to such objectives has been
earned, and may include alternative and multiple Performance Criteria, including, but not limited
to, operating and maintenance expense targets, customer satisfaction, safety, and financial goals
including, but not limited to, absolute or relative (i.e., in relation to a peer group of
companies) total shareholder return, revenues, sales, net income, EBITDA, return on assets,
earnings per share and/or growth thereof, or net worth of the Company, any of its Subsidiaries,
divisions, business units or other areas of the Company.
2.30 Performance Period shall mean the time period designated by the Committee
during which Performance Criteria must be met in order for a Participant to earn a
performance-based award.
2.31 Performance Share or Performance Unit shall mean an Award granted to
a Participant pursuant to Section 7.3, the value of which is linked to Company Stock and which is
earned, in whole or in part, by the attainment of Performance Criteria pre-established by the
Committee and described in the Agreement.
2.32 Person shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a group as defined in
Section 13(d) thereof.
2.33 Plan shall mean the Piedmont Natural Gas Company, Inc. Incentive Compensation
Plan, as set forth herein and as hereafter amended from time to time.
2.34 Restricted Stock shall mean an Award of Stock to a Participant pursuant to
Article VI.
2.35 Restriction Period shall mean the period during which the transfer of
Restricted Stock is prohibited and is subject to a risk of forfeiture pursuant to Article VI.
3
2.36 Retirement shall mean the termination of employment of a Participant on or
after such Participant is eligible for early or normal retirement under the defined benefit pension
plan sponsored by the Company or would have been so eligible if the Participant were eligible to
participate in such plan. Notwithstanding the foregoing, Retirement before the Participant is
(or would be) eligible for normal retirement under such plan shall require prior approval by the
Committee. With respect to a Participant who is an Outside Director, Retirement shall mean the
end of the directors term of office upon attaining the mandatory retirement age for directors.
2.37 Rule 16b-3 shall mean Rule 16b-3 under Section 16(b) of the Exchange Act as
adopted in Exchange Act Release No. 34-37260 (May 30, 1996), or any successor rule as amended from
time to time.
2.38 Section 162(m) shall mean Section 162(m) of the Code, or any successor section
under the Code, as amended from time to time.
2.39 Securities Act shall mean the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as amended from time to time.
2.40 Shares shall mean shares of Common Stock of the Company.
2.41 Stock Appreciation Right shall mean the right to receive an amount equal to the
excess of the Fair Market Value of a share of Stock (as determined on the date of exercise) over
the Option Price of a related Option or the Fair Market Value of the Stock on the Grant Date of the
Stock Appreciation Right.
2.42 Stock Option or Option shall mean an Incentive Stock Option or a
Non-qualified Stock Option.
2.43 Stock Unit Award shall mean an award of Common Stock or units granted under
Section 7.4.
2.44 Subsidiary shall mean any entity (other than the Company) with respect to which
the Company owns, either directly or indirectly, at least 50% of the total combined voting power of
all classes of stock or other ownership interest.
ARTICLE III
ELIGIBILITY
ELIGIBILITY
The Committee shall have sole and complete discretion to determine the Eligible Employees and
Outside Directors who shall be eligible to participate in the Plan. An Outside Director who is
selected by the Committee to participate in the Plan shall only be eligible for Awards under
Articles V, VI or VII and shall not be eligible for Annual Incentive Awards under Article VIII. An
Eligible Employee or Outside Director designated by the Committee as eligible hereunder shall be
considered a Participant upon receiving an Award under the Plan.
4
ARTICLE IV
SHARES SUBJECT TO THE PLAN
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided for in Section 4.3, the
maximum aggregate number of Shares that may be issued pursuant to Awards made under the Plan
(whether granted under the Plan before or after the Effective Date) shall not exceed 1,500,000
Shares.
Shares of Common Stock issued pursuant to Awards under the Plan may be authorized but unissued
Shares or Shares purchased in the open market for purposes of the Plan.
4.2 Share Counting. The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting and make adjustments in the number of shares of Common
Stock available under Section 4.1 if the number of Shares actually delivered to a Participant
differs from the number of shares of Common Stock previously counted in connection with an Award
to the Participant, subject, however, to the following:
(i) Shares subject to an Award (whether granted under the Plan before or after the
Effective Date ) that is canceled, expired, forfeited, settled in cash or is otherwise
terminated without a delivery of Common Stock to the Participant will again be available for
Awards under the Plan.
(ii) Shares that are withheld in payment of the exercise price of a Stock Option or in
payment of withholding taxes relating to an Award shall be deemed to constitute Shares
delivered to the Participant and shall not be available for future Awards under the Plan.
(iii) Upon the exercise of a Stock Option or if a Stock Appreciation Right is settled
with Shares, the total number of Shares subject to the Stock Option or Stock Appreciation
Right (as the case may be) shall be deemed delivered to the Participant (regardless of the
number of shares of Common Stock actually paid to the Participant) and shall not be
available for future Awards under the Plan.
4.3 Capital Adjustments. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure, capitalization or Shares of the Company, the Committee shall
make such adjustments as are appropriate in the maximum number and kind of Shares that may be
issued under the Plan and to any Participant, in the number and kind of Shares covered by any
Awards granted before such change and in the Option Price of any Option granted before such change
or in the Fair Market Value of the Shares on the Grant Date of any Stock Appreciation Right granted
before such change. Such adjustments shall be intended to put the Participant in the same position
as he or she was in immediately before such event.
ARTICLE V
STOCK OPTIONS
STOCK OPTIONS
5.1 Grant of Stock Options. Subject to the limitation set forth in Section 4.1 and
the other terms and provisions of the Plan and applicable law, the Committee, at any time and from
time to time, may grant Stock Options to Participants as it shall determine. The Committee shall
have sole and complete discretion in determining the type of Option granted, the Option Price, the
duration of the Option, the number of Shares to which an Option pertains, any conditions imposed
upon the exercisability or the transferability of the Options, including vesting conditions, the
conditions under which the Option may be terminated, and any such other provisions as may be
warranted to comply
5
with the law or rules of any securities trading system or stock exchange. Each Option grant shall
have such specified terms and conditions detailed in an Option Agreement. The Opton Agreement
shall specify whether the Option is intended to be an Incentive Stock Option or a Non-qualified
Stock Option. However, no Incentive Stock Option may be awarded (a) after the tenth anniversary of
the Effective Date or (b) to a Participant who is not an Employee.
5.2 Option Price. The exercise price per share of Stock covered by an Option shall be
determined on the Grant Date by the Committee; provided that the Option Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Grant Date. Further provided, in the
case of an Incentive Stock Option granted to any Employee who owns more than 10% of the total
combined voting power of all classes of stock of the Company or a Subsidiary, the Option Price
shall not be less than 110% of the Fair Market Value of the Common Stock on the Grant Date. No
Option shall provide by its terms for the re-setting of its exercise price or for its cancellation
and reissuance, in whole or in part; provided that the foregoing shall not limit the authority of
the Committee to grant additional Options hereunder.
5.3 Exercisability. Except as otherwise provided herein, Options granted under the
Plan shall be exercisable at such times and be subject to such restrictions and conditions as the
Committee shall determine, which will be specified in the Option Agreement and need not be the same
for each Participant. However, under no circumstances, may an Incentive Stock Option be
exercisable after the expiration of 10 years from the Grant Date (5 years from the Grant Date for
any Employee who owns more than 10% of the total combined voting power of all classes of stock of
the Company or a Subsidiary).
5.4 Method of Exercise. Options shall be exercised by the delivery of a written
notice from the Participant to the Company in a form prescribed by the Committee setting forth the
number of Shares with respect to which the Option is to be exercised, accompanied by full payment
of the Option Price for the Shares. The Option Price shall be payable to the Company in full in
cash, or its equivalent, or by delivery of Shares (not subject to any security interest or pledge)
having a Fair Market Value at the time of exercise equal to the Option Price of the Shares with
respect to which the Option is to be exercised, or by a combination of the foregoing. In addition,
at the request of the Participant, and subject to applicable laws and regulations, the Company may
(but shall not be required to) cooperate in a Cashless Exercise of the Option. After receipt of
written notice and full payment of the Option Price, the Company shall deliver to the Participant
as soon as practicable, or, at a later mutually agreed upon date, a stock certificate or other
documentation, issued in the Participants name, evidencing the number of Shares with respect to
which the Option was exercised.
5.5 Death, Disability, Retirement or Other Termination of Employment. Except as
otherwise provided in a Participants Option Agreement:
(a) in the event of a Participants death, Disability or Retirement while an Employee
or an Outside Director, Options granted to the Participant shall be considered immediately
vested and shall be exercisable at such time as specified in the Option Agreement, and
(b) subject to Article X, in the event the Participant resigns, is terminated from the
Company or, in the case of an Outside Director, is not reelected to the Board or otherwise
resigns as a member of the Board, Options which have not vested by such date shall be
forfeited, and the Participant shall have three months from such date to exercise vested
Options (but not beyond the expiration of the term of the Option, if earlier).
Notwithstanding
6
the foregoing, if the Participant is terminated from the Company for Cause, all of the
Participants Options (whether vested or unvested) shall be immediately forfeited.
ARTICLE VI
RESTRICTED STOCK
RESTRICTED STOCK
6.1 Grant of Restricted Stock. Subject to the limitations set forth in Section 4.1
and the other terms and provisions of the Plan and applicable law, the Committee, at any time, and,
from time to time, may grant shares of Restricted Stock under the Plan to such Participants, and in
such amounts and for such duration and/or consideration as it shall determine.
6.2 Restricted Stock Award Agreement. Restricted Stock granted hereunder shall be
evidenced by an Award Agreement that shall specify the Restriction Period, the number of Shares of
Restricted Stock granted, and such other provisions as the Committee may deem advisable, including
requirements established pursuant to the Securities Act, the Exchange Act, the Code and any
securities trading system or stock exchange upon which such Shares under the Plan are listed.
6.3 Restriction Period. Except as otherwise provided in this Article, the Shares of
Restricted Stock granted under the Plan may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated until the termination of the applicable Restriction Period.
Subject to Section 6.7 and Article X, if a Participant resigns, is otherwise terminated from
the Company or, in the case of an Outside Director is not reelected to the Board or otherwise
resigns as a member of the Board, prior to the end of the Restriction Period, he or she will
forfeit all interests in the Restricted Stock Award. All rights with respect to the Restricted
Stock granted to a Participant under the Plan shall be exercisable during his or her lifetime only
by such Participant or his or her guardian or legal representative.
6.4 Removal of Restrictions. Except as otherwise provided in this Article, Restricted
Stock covered by each Award made under the Plan shall become freely transferable by the Participant
after the last day of the Restriction Period and/or upon the satisfaction of other conditions as
determined by the Committee.
6.5 Voting Rights. During the Restriction Period, Participants in whose name
Restricted Stock is granted under the Plan may exercise full voting rights with respect to those
Shares.
6.6 Dividends and Other Distributions. Except as otherwise provided in a
Participants Award Agreement, during the Restriction Period, Participants in whose name Restricted
Stock is granted under the Plan shall be entitled to receive all dividends and other distributions
paid with respect to those Shares. If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions on transferability and forfeitability as the
Restricted Stock with respect to which they were distributed.
6.7 Death, Disability or Retirement. Except as otherwise provided in a Participants
Award Agreement, in the event of the Participants death, Disability or Retirement while an
Employee or an Outside Director and before the Restriction Period has ended, the restrictions on
the Shares of Restricted Stock awarded to the Participant shall be removed upon the Participants
date of death, Disability or Retirement.
7
ARTICLE VII
OTHER STOCK BASED AWARDS
OTHER STOCK BASED AWARDS
7.1 Grant of Other Stock Based Awards. Subject to the limitations set forth in
Section 4.1 and the other terms and provisions of the Plan and applicable law, the Committee may,
at any time and from time to time, issue to Participants, either alone or in addition to other
Awards made under the Plan, Stock Appreciation Rights as described in Section 7.2, Performance
Awards as described in Section 7.3 or other Stock Unit Awards as described in Section 7.4. Any
such Awards shall be governed by the terms of an Award Agreement, and the Committee may impose such
terms and conditions, including Performance Criteria conditions and conditions similar to those
described in Section 5.1 and/or Section 6.2 and not inconsistent with the terms of this Plan, as it
deems appropriate on such Award.
7.2 Stock Appreciation Rights.
(a) Grant of Stock Appreciation Rights. Stock Appreciation Rights granted in
tandem with an Option or in addition to an Option may be granted at the time of the Option
or at a later time. No Stock Appreciation Rights granted under the Plan may be exercisable
until the expiration of at least six months after the Grant Date (except that such
limitations shall not apply in the case of death or Disability of the Participant).
(b) Price. The exercise price of each Stock Appreciation Right shall be
determined at the time of grant by the Committee, subject to the limitation that the
exercise price shall not be less than 100% of Fair Market Value of the Common Stock on the
Grant Date.
(c) Exercise. Stock Appreciation Rights shall be exercised by the delivery of
a written notice from the Participant to the Company in a form prescribed by the Committee.
Upon such exercise, the Participant shall be entitled to receive an amount equal to the
excess of the Fair Market Value of a Share over the grant price thereof on the date of
exercise of the Stock Appreciation Right multiplied by the number of Shares for which the
Stock Appreciation Right was granted.
(d) Payment. Payment upon exercise of the Stock Appreciation Right shall be
made in Shares of Common Stock. However, if any payment in the form of Shares results in a
fractional share, such payment for the fractional share shall be made in cash.
7.3 Performance Awards.
(a) Grant of Performance Awards. Performance Awards granted hereunder may be
issued in the form of either Performance Units or Performance Shares to Participants
subject to the Performance Criteria, Performance Period and other considerations or
restrictions as the Committee shall determine. The Committee shall have complete
discretion in determining the number and value of Performance Units or Performance Shares
granted to each Participant.
(b) Value of Performance Awards. The Committee shall determine the number and
value of Performance Units or Performance Shares granted to each Participant as a
Performance Award. The Committee shall set Performance Criteria in its discretion for each
Participant who is granted a Performance Award. The Committee shall determine the extent
to which such Performance Criteria are met and will determine the value of the Performance
8
Unit or Performance Share to the Participant, and in making such determination, the
Committee may use negative discretion to decrease, but not increase, the value of the
Performance Unit or Performance Share.
(c) Settlement of Performance Awards. After a Performance Period has ended,
the holder of a Performance Unit or Performance Share shall be entitled to receive the
value thereof determined as provided in Section 7.3(b). Notwithstanding the foregoing, no
distributions in respect of Performance Units shall be made if at the time distribution
would otherwise have been made:
(i) The regular quarterly dividend on any outstanding common or preferred
shares of the Company has been omitted and not subsequently paid or there exists
any default in payment of dividends on any such outstanding shares,
(ii) The estimated consolidated net income of the Company for the immediately
preceding twelve-month period is less than the sum of (i) the aggregate amount to
be distributed plus (ii) dividends on all outstanding preferred and common shares
of the Company applicable to such twelve-month period (either paid, declared or
accrued at the most recently paid rate); or
(iii) The distribution would result in a default in any agreement by which the
Company is bound.
(d) Form of Payment. Payment of the amount to which a Participant shall be
entitled upon the settlement of the Performance Award shall be made in Shares. However, if
any payment in the form of Shares results in a fractional share, such payment for the
fractional share shall be made in cash.
(e) Effect of Death, Disability, Retirement or Leave of Absence During Performance
Period.
(i) Unless otherwise provided in a Participants Award Agreement, in the event
of the Participants Disability or Retirement before the Performance Period has
ended, the number of Shares the Participant shall be entitled to, if any, shall
equal (A) the number of Shares, if any, the Participant would otherwise be entitled
to had the individual been an active Participant at the end of the Performance
Period (i.e., as adjusted or forfeited based on the actual Performance Criteria)
multiplied by (B) the portion of the Performance Period during which the
Participant was an active Participant, and such Shares shall be distributed within
2 1/2 months after the end of the Performance Period;
(ii) Unless otherwise provided in a Participants Award Agreement, in the
event of a Participants death while an Employee before the Performance Period has
ended, the Company will be assumed to have achieved a target performance level for
the Performance Period in which death occurs, and the number of Shares the
Participants Designated Beneficiary shall be entitled to, if any, shall equal the
number of Shares the Participant would otherwise be entitled to had the Participant
been an active Participant at the end of the Performance Period, and such Shares
shall be distributed within 60 days after the Participants death; and
9
(iii) Absence of a Participant from employment during a Performance Period and
entitling the Participant to (A) reemployment rights following military service
under the Uniformed Services Employment and Reemployment Rights Act (USERRA) (or
any other similar applicable federal or state law) or (B) sickness allowance or
short-term disability benefits under the Companys employee benefit plans, shall
not affect any Stock-based Award made under this Article VII. Unless otherwise
provided in a Participants Award Agreement, in the event a Participant is absent
from employment during a Performance Period due to an authorized leave of absence
not described in the immediately preceding sentence, the amount or number of Shares
the Participant shall be entitled to, if any, under any Stock-based Award made
under this Article VII shall equal (A) the amount or number of Shares, if any, to
which the Participant would otherwise be entitled had the individual been an active
Participant during the entire Performance Period (i.e., as adjusted or forfeited
based on the Performance Criteria) multiplied by (B) the portion of the Performance
Period during which the Participant was an active Participant (i.e., excluding the
period of the authorized leave of absence) and such Shares shall be distributed
within 2 1/2 months after the end of the Performance Period.
7.4 Stock Unit Awards.
(a) Grant of Other Stock Unit Awards. Stock Unit Awards granted hereunder may
be in the form of Common Stock or other securities. The value of each such Award shall be
based, in whole or in part, on the value of the underlying Common Stock on the Grant Date.
The Committee, in its sole and complete discretion, may determine that an Award, either in
the form of a Stock Unit Award under this Section or as an Award granted pursuant to the
other provisions of the Plan, may provide to the Participant (i) dividends or dividend
equivalents (payable on a current or deferred basis) and (ii) cash payments in lieu of or
in addition to an Award. Subject to the provisions of the Plan, the Committee, in its sole
and complete discretion, shall determine the terms, restrictions, conditions, vesting
requirements, and payment rules of the Award. The Award Agreement shall specify the rules
of each Award as determined by the Committee. However, each Stock Unit Award need not be
subject to identical rules.
(b) Rules. The Committee, in its sole and complete discretion, may grant a
Stock Unit Award subject to the following rules:
(i) Common Stock or other securities issued pursuant to Stock Unit Awards may
not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated
by a Participant until the expiration of at least six months from the Grant Date,
except that such limitation shall not apply in the case of death or Disability of
the Participant, a Change in Control, or where a Committee of the Board, comprised
of non-Employee directors of the Company within the meaning of Rule 16b-3, approved
the Award. To the extent Stock Unit Awards are deemed to be derivative securities
within the meaning of Rule 16b-3, the rights of a Participant who is subject to
Section 16 of the Exchange Act with respect to such Awards shall not vest or be
exercisable until the expiration of at least six months from the Award Date unless
the Board or the Committee, comprised of non-Employee directors of the Company
within the meaning of Rule 16b-3, specifies otherwise. All rights with respect to
such Stock Unit Awards granted to a Participant under the Plan shall be exercisable
during his or her lifetime only by such Participant or his or her guardian or legal
representative.
10
(ii) Stock Unit Awards may require the payment of cash consideration by the
Participant in receipt of the Award or provide that the Award, and any Common Stock
or other securities issued in conjunction with the Award, be delivered without the
payment of cash consideration.
(iii) The Committee, in its sole and complete discretion, may establish
certain Performance Criteria that may relate in whole or in part to receipt of
Stock Unit Awards.
(iv) Stock Unit Awards may be subject to a deferred payment schedule and/or
vesting over a specified period.
(v) The Committee, in its sole and complete discretion, as a result of certain
circumstances, may waive or otherwise remove, in whole or in part, any restriction
or condition imposed on a Stock Unit Award.
ARTICLE VIII
ANNUAL INCENTIVE AWARDS
ANNUAL INCENTIVE AWARDS
8.1 Timing and Determination of Annual Incentive Awards. Following the completion of
a Performance Period, the Committee shall undertake or direct an evaluation of Performance Criteria
for such Performance Period as determined in Section 8.2.
No Annual Incentive Award may be paid without a determination by the Committee that the
Performance Criteria have been met, and in making such determination, the Committee may use
negative discretion to decrease, but not increase, the Annual Incentive Award.
Any Annual Incentive Awards will be paid at such time or times as may be determined by the
Committee following the end of the Performance Period to which they relate, but not later than the
last day of the 2 1/2 month period following the end of the Performance Period.
8.2 Performance Criteria for Annual Incentive Awards. Performance Criteria of the
Company will be established in writing by the Committee.
The Performance Period with respect to Awards shall be the Companys fiscal year or any other
period designated as such by the Committee.
8.3 Maximum Annual Incentive Award. The maximum individual Annual Incentive Award for
a Performance Period of twelve calendar months will be $1,000,000, provided the Eligible Employee
has been a Participant for such twelve month period. In the event that an Annual Incentive Award
is being determined for a Performance Period of less than twelve calendar months or for the
Performance Period in which the Eligible Employee becomes a Participant, dies, incurs a Disability
or terminates employment due to Retirement, the maximum Annual Incentive Award of $1,000,000 shall
be prorated in accordance with Section 8.4 or 8.5, whichever is applicable.
11
8.4 Short Performance Period.
(a) Death, Disability or Retirement. In the event of a Participants death,
Disability or Retirement prior to the date the Annual Incentive Award is paid, the
following shall apply:
(i) In the event of the Participants death or Disability before the end of
the Performance Period, the Company will be assumed to have achieved a target
performance level for the Performance Period in which death or Disability occurs
for purposes of determining the Annual Incentive Award and such Annual Incentive
Award shall be paid within 60 days after the Participants death or Disability. In
the event of the Participants death or Disability after the end of the Performance
Period, but before the date the Annual Incentive Award is paid, the Participants
Annual Incentive Award shall be payable based on the actual Performance Criteria
for the entire Performance Period.
(ii) In the event of a Participants Retirement, the Participants Annual
Incentive Award shall be determined and payable following the end of the
Performance Period based on the actual Performance Criteria for the entire
Performance Period.
(iii) In any of such events, the amount of Annual Incentive Award shall be
prorated as necessary to reflect the period of time during which the individual was
employed during the Performance Period.
(b) New Participants. In the event an individual becomes a Participant and is
eligible for an Annual Incentive Award based on a Performance Period shorter than twelve
months, such Annual Incentive Award shall be prorated to reflect the period of time the
individual was employed in the Performance Period.
(c) Leave of Absence. Absence of a Participant from employment during a
Performance Period and entitling the Participant to (i) reemployment rights following
military service under the Uniformed Services Employment and Reemployment Rights Act
(USERRA) (or any other similar applicable federal or state law) or (ii) sickness allowance
or short-term disability benefits under the Companys employee benefit plans, shall not
affect any Annual Incentive Award. In the event a Participant is absent from employment
during a Performance Period due to an authorized leave of absence not described in the
immediately preceding sentence, the amount the Participant shall be entitled to receive, if
any, under any Annual Incentive Award shall equal (i) the amount, if any, to which the
Participant would otherwise be entitled had the individual been an active Participant
during the entire Performance Period (i.e., as adjusted or forfeited based on the
Performance Criteria) multiplied by (ii) the portion of the Performance Period during which
the Participant was an active Participant (i.e., excluding the period of the authorized
leave of absence) and such amount shall be paid following the end of the Performance
Period.
8.5 Limitation on Right to Payment of Award. Notwithstanding any other Plan provision
to the contrary, no Participant shall have a right to receive payment of an Annual Incentive Award
under the Plan if, subsequent to the commencement of the Performance Period and prior to the date
any Award would otherwise be payable, the Participant resigns or is otherwise terminated from the
Participating Company for reasons other than death, Disability, or Retirement or following a Change
12
in Control as provided in Article X. Notwithstanding the foregoing, no distributions of
Annual Incentive Awards shall be made if at the time distribution would otherwise have been made:
(a) The regular quarterly dividend on any outstanding common or preferred shares of
the Company has been omitted and not subsequently paid or there exists any default in
payment of dividends on any such outstanding shares,
(b) The estimated consolidated net income of the Company for the immediately preceding
twelve-month period is less than the sum of (i) the aggregate amount to be distributed plus
(ii) dividends on all outstanding preferred and common shares of the Company applicable to
such twelve-month period (either paid, declared or accrued at the most recently paid rate);
or
(c) The distribution would result in a default in any agreement by which the Company
is bound.
ARTICLE IX
SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
Awards to Covered Participants shall be governed by the conditions of this Article in addition
to the requirements of Articles V through VIII above. Should conditions set forth under this
Article conflict with the requirements of Articles V through VIII, the conditions of this Article
shall prevail.
(a) All Performance Criteria relating to Covered Participants for a relevant
Performance Period shall be established by the Committee in writing prior to the beginning
of the Performance Period, or by such other later date for the Performance Period as may be
permitted under Section 162(m) of the Code.
(b) The Performance Criteria must be objective and must satisfy third party
objectivity standards under Code Section 162(m).
(c) The Performance Criteria shall not allow for any discretion by the Committee to
increase any Award, but discretion to lower an Award is permissible.
(d) The Award and payment of any Award under this Plan to a Covered Participant with
respect to a relevant Performance Period shall be contingent upon the attainment of the
Performance Criteria that are applicable to such Award. The Committee shall certify in
writing prior to payment of any such Award that such applicable Performance Criteria have
been satisfied. Resolutions adopted by the Committee may be used for this purpose.
(e) The aggregate maximum number of Shares subject to Awards that may be granted to
any Covered Participant under Articles V, VI and VII during any fiscal year of the Company
shall be 250,000 Shares.
(f) All Awards under this Plan to Covered Participants or to other Participants who
may become Covered Participants at a relevant future date shall be further subject to such
other conditions, restrictions, and requirements as the Committee may determine to be
necessary to carry out the purposes of this Article, which is to avoid the loss of
deduction by the Company under Code section 162(m).
13
ARTICLE X
CHANGE IN CONTROL
CHANGE IN CONTROL
10.1 Acceleration upon a Change in Control. The provision of this Section shall apply
notwithstanding any Plan provision to the contrary, and notwithstanding any agreement between the
Company and such Participant which relate to the terms of Awards hereunder, upon a Change in
Control. Upon the termination of an employee Participants employment by the Company without
Cause, or by an employee Participant for Good Reason, within a period of one year following the
occurrence of a Change in Control, the following shall apply:
(a) Any Stock Option and Stock Appreciation Right Awards shall be exercisable within
such time as specified in the Award Agreement.
(b) All restrictions on any Restricted Stock Awards and Stock Unit Awards shall be
eliminated, and such awards shall immediately vest and not be subject to forfeiture.
(c) If the termination of employment occurs before the end of the Performance Period,
the amount of any Performance Award shall be determined assuming the Company achieved a
target performance level and no adjustment or proration shall be made to the Award. If the
termination of employment occurs after the end of the Performance Period but before the
Performance Award is paid, the amount payable shall be determined based on the actual
Performance Criteria for the Performance Period. In either case, settlement of the
Performance Award shall be made within 2 1/2 months after termination of employment or the
end of the Performance Period (as the case may be).
(d) If the termination of employment occurs before the end of the Performance Period,
the amount of any Annual Incentive Award shall be determined assuming the Company has
achieved a target performance level, and such amount shall then be multiplied by the
portion of the Performance Period the individual was an active Participant hereunder. If
the termination of employment occurs after the end of the Performance Period but before the
Annual Incentive Award is paid, the amount payable shall be determined based on the actual
Performance Criteria for the Performance Period. In either case, payment of the Annual
Incentive Award shall be made within 2 1/2 months after termination of employment or the end
of the Performance Period (as the case may be).
10.2 Change in Control Defined. For purposes of this Article, Change in Control
shall have the same meaning as such term or similar term is defined in a Participants individual
agreement with the Company which relates to such Participants compensation and benefits upon the
occurrence of a change in ownership of the Company or similar event.
(a) In the event there is no such agreement, Change in Control shall mean:
(i) The acquisition by any Person of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more
of either (A) the then outstanding shares of Common Stock of the Company (the
Outstanding Company Common Stock) or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the Outstanding Company Voting Securities); provided,
however, that the following acquisitions shall not constitute an acquisition of
control: any acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), any acquisition by the Company,
any
14
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of subsection (iii) of this
section are satisfied;
(ii) Individuals who, as of the Effective Date, constitute the Board of
Directors (the Incumbent Board) cease for any reason to constitute at least a
majority of the Board of Directors; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination for election
by the Companys shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board;
(iii) Consummation of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or consolidation, (A) more than sixty
percent (60%) of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation and the
combined voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company, any employee
benefit plan or related trust of the Company, or such corporation resulting from
such reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock or
Outstanding Voting Securities, as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger or consolidation were
members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation;
(iv) Approval by the shareholders of the Company of (A) a complete liquidation
or dissolution of the Company or (B) the sale or other disposition of all or
substantially all of the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition (1) more than sixty
percent (60%) of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting securities
15
of such corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person (excluding the Company and any employee benefit
plan or related trust of the Company, or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition, directly
or indirectly, twenty percent (20%) or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, twenty percent (20%) or more of, respectively, the then
outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (3) at least a majority of the
members of the board of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company; or
(v) The closing, as defined in the documents relating to, or as evidenced by a
certificate of any state or federal governmental authority in connection with, a
transaction approval of which by the shareholders of the Company would constitute a
Change in Control under subsection (iii) or (iv) of this Section.
(b) Notwithstanding (a) above, if the Participants employment is terminated before a
Change in Control and the Participant reasonably demonstrates that such termination (i) was
at the request of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control or
(ii) otherwise occurred in connection with, or in anticipation of, a Change in Control
which actually occurs, then for all purposes of this Plan, the date of a Change in
Control with respect to the Participant shall mean the date immediately prior to the date
of such termination of the Participants employment.
10.3 Good Reason Defined. Good Reason shall mean, without the Participants written
consent,
(a) a change in the Participants status, position or responsibilities which, in his
reasonable judgment, represents a demotion from his status, position or responsibilities as
in effect immediately prior to the Change in Control;
(b) the assignment to the Participant of any duties or responsibilities which, in his
reasonable judgment, are inconsistent with such status, position or responsibilities
immediately prior to the Change in Control; or any removal of the Participant from or
failure to reappoint or reelect him to any of such positions that the Participant had
immediately prior to the Change in Control;
(c) a reduction by the Company in the Participants base salary or the Companys
failure to increase (within twelve (12) months of the Participants last increase in base
salary) the Participants base salary after a Change in Control in an amount which at least
equals, on a percentage basis, the average percentage increase in base salary for all
16
executive and senior executives of the Company effected in the preceding twelve (12)
months;
(d) the relocation of the principal executive offices of the Company or Subsidiary,
whichever entity on behalf of which the Participant performs a principal function of that
entity as part of his employment services, to a location more than fifty (50) miles outside
the Charlotte, North Carolina metropolitan area or, if his services are not performed in
Charlotte, North Carolina, the Companys requiring him to be based at any place other than
the location at which he performed his duties immediately prior to the Change in Control,
except for required travel on the Companys business to an extent substantially consistent
with his business travel obligations at the time of a Change in Control;
(e) the failure by the Company to continue in effect any incentive, bonus or other
compensation plan in which the Participant participates immediately prior to the Change in
Control, including but not limited to this Plan, unless an equitable arrangement (embodied
in an ongoing substitute or alternative plan), with which he has consented, has been made
with respect to such plan in connection with the Change in Control, or the failure by the
Company to continue his participation therein, or any action by the Company which would
directly or indirectly materially reduce his participation therein;
(f) the failure by the Company to continue to provide the Participant with benefits
substantially similar to those enjoyed by him or to which he was entitled under any of the
Companys pension, profit sharing, life insurance, medical, dental, health and accident, or
disability plans in which he was participating at the time of a Change in Control, the
taking of any action by the Company which would directly or indirectly materially reduce
any of such benefits or deprive him of any material fringe benefit enjoyed by him or to
which he was entitled at the time of the Change in Control, or the failure by the Company
to provide him with the number of paid vacation and sick leave days to which he is entitled
on the basis of years of service with the Company in accordance with the Companys normal
vacation policy in effect on the date hereof;
(g) the failure of the Company to obtain a satisfactory agreement with any successor
or assign of the Company to assume and agree to perform under any Change in Control
agreement between the Company and the Participant; or
(h) any request by the Company that the Participant participate in an unlawful act or
take any action constituting a breach of the Participants professional standard of
conduct.
10.4 Cause Defined. Cause shall mean
(a) intentional gross misconduct by the Participant damaging in a material way to the
Company, or
(b) a material breach of the Participants employment agreement, after the Company has
given the Participant notice thereof and a reasonable opportunity to cure.
17
ARTICLE XI
ADMINISTRATION
ADMINISTRATION
11.1 The Committee. The Plan shall be administered and interpreted by the Committee
which shall have full authority, discretion and power necessary or desirable for such
administration and interpretation. The express grant in this Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the Committee. In its sole
and complete discretion the Committee may adopt, alter, suspend and repeal any such administrative
rules, regulations, guidelines, and practices governing the operation of the Plan as it shall from
time to time deem advisable. In addition to any other powers and, subject to the provisions of the
Plan, the Committee shall have the following specific powers: (a) to determine the terms and
conditions upon which Awards may be made and exercised; (b) to determine the Participants to which
Awards shall be made; (c) to determine all terms and provisions of each Agreement, which need not
be identical for types of Awards nor for the same type of Award to different Participants; (d) to
construe and interpret all terms, conditions and provisions of the Plan and all Agreements; (e) to
establish, amend, or waive rules or regulations for the Plans administration; (f) to accelerate
the exercisability of any Award, the length of a Performance Period or the termination of any
Restriction Period; and (g) to make all other determinations and take all other actions necessary
or advisable for the administration or interpretation of the Plan. The Committee may seek the
assistance or advice of any persons it deems necessary to the proper administration of the Plan.
11.2 Committee Decisions. Unless strictly and expressly prohibited by law, all
determinations and decisions made by the Committee pursuant to the provisions of this Plan shall be
final, conclusive, and binding upon all persons, including Participants, Designated Beneficiaries,
the Company, its shareholders and employees.
11.3 Rule 16b-3 and Section 162(m) Requirements. Notwithstanding any other
provision of the Plan, the Committee may impose such conditions on any Award as it may deem to be
advisable or required to satisfy the requirements of Rule 16b-3 or Section 162(m).
ARTICLE XII
GENERAL PROVISIONS
GENERAL PROVISIONS
12.1 Withholding. The Company shall have the right to deduct or withhold, or require
a Participant to remit to the Company, any taxes required by law to be withheld from Awards made
under this Plan. In the event an Award is paid in the form of Common Stock, the Participant may
remit to the Company the amount of any taxes required to be withheld from such payment in cash, or,
in lieu thereof, the Company may withhold (or the Participant may be provided the opportunity to
elect to tender) the number of shares of Common Stock equal in Fair Market Value to the amount
required to be withheld.
12.2 Code Section 409A.
(a) Delay of Certain Payments. Notwithstanding anything in the Plan to the
contrary, if any amount or benefit that the Company determines would constitute non-exempt
deferred compensation for purposes of Section 409A of the Code would otherwise be payable
or distributable under this Plan by reason of a Participants termination of employment,
then to the extent necessary to comply with Code Section 409A:
(i) if the payment or distribution is payable in a lump sum, the Participants
right to receive payment or distribution of such non-exempt deferred
18
compensation will be delayed until the earlier of the Participants death or
the seventh month following the Participants termination of employment; and
(ii) if the payment or distribution is payable over time, the amount of such
non-exempt deferred compensation that would otherwise be payable during the six (6)
month period immediately following the Participants termination of employment will
be accumulated and the Participants right to receive payment or distribution of
such accumulated amount will be delayed until the earlier of the Participants
death or the seventh month following the Participants termination of employment
and paid on the earlier of such dates, without interest, and the normal payment or
distribution schedule for any remaining payments or distributions will commence.
(b) Separation from Service Required. A termination of employment shall not
be deemed to have occurred for purposes of any provision of this Plan providing for the
payment of any amounts or benefits subject to Code Section 409A upon or following a
termination of employment unless such termination is also a separation from service
within the meaning of Code Section 409A and, for purposes of any such provision of this
Plan, references to a termination, termination of employment or like terms shall mean
separation from service.
(c) Interpretation and Administration. Nothing in this Plan shall operate or
be construed to cause the Plan to fail to comply with the requirements of Code Section 409A
and, to the extent applicable, it is intended that the Plan comply with the provisions of
Code Section 409A and shall be administered in a manner consistent with that intent. Any
provision of this Plan that would cause the Plan or any payment made hereunder to fail to
satisfy Code Section 409A shall have no force and effect until amended by the Company to
comply with Code Section 409A (which amendment may be retroactive to the extent permitted
by Code Section 409A) and may be made by the Company without the consent of any
Participant.
12.3 Terms of Awards. Each Award granted under the Plan shall be evidenced in a
corresponding Award Agreement provided in writing to the Participant, which shall specify the
terms, conditions and any rules applicable to the Award, including but not limited to the effect of
a Change in Control, or death, Disability, or other termination of employment of the Participant on
the Award.
12.4 Recoupment of Awards. The Committee may require in any Award Agreement that any
current or former Participant reimburse the Company for all or any portion of any Award, terminate
any outstanding, unexercised, unexpired or unpaid Award, rescind any exercise, payment or delivery
pursuant to an Award or recapture any Shares (whether restricted or unrestricted) or proceeds from
the Participants sale of Shares issued pursuant to an Award to the extent required by any
recoupment or clawback policy adopted by the Committee in its discretion or to comply with the
requirements of any applicable law.
12.5 Forfeiture of Awards for Engaging in Competition. All outstanding Awards held by
a Participant and not previously paid shall be immediately forfeited and canceled in their entirety
if the Participant, without the prior written consent of the Company, and while employed by the
Company, becomes associated with, employed by, renders services to, consults with, acquires
ownership of more than five percent of any class of stock of, or acquires beneficial ownership of
more than five percent of the earnings or profits of any corporation, partnership, proprietorship,
trust,
19
or other entity which, in the Committees judgment, competes directly or indirectly with the
Company or any Subsidiary in any of their lines of business.
12.6 Change in Position. The Committee, in its discretion, may reduce an Annual
Incentive Award or Performance Award in the event of a Participants demotion during a Performance
Period, or subject to Article IX, grant an additional Annual Incentive Award or Performance Award
in the event of a Participants promotion during a Performance Period.
12.7 Non-transferability. No Award, including any Options, granted under the Plan may
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, except by will or
the laws of descent and distribution. Further, no lien, obligation, or liability of the
Participant may be assigned to any right or interest of the Participant in an Award under this
Plan.
12.8 No Right to Employment. Neither the Plan, nor any Award made, or any other
action taken, hereunder shall be construed as giving any Participant or other person any right of
employment or continued employment with the Participating Company.
12.9 Rights as Shareholder. Subject to the terms and conditions of each particular
Award, no Participant or Designated Beneficiary shall be deemed a shareholder of the Company nor
have any rights as such with respect to any shares of Common Stock to be provided under the Plan
until he or she has become the holder of such shares.
12.10 Construction of the Plan. Except to the extent superseded by the laws of the
United States, the Plan and all Agreements shall be governed, construed, interpreted and
administered in accordance with the laws of the State of North Carolina. In the event any
provision of the Plan or any Agreement shall be held invalid, illegal or unenforceable, in whole or
in part, for any reason, such determination shall not affect the validity, legality or
enforceability of any remaining provision, portion of provision or the Plan overall, which shall
remain in full force and effect as if the Plan had been absent the invalid, illegal or
unenforceable provision or portion thereof.
12.11 Amendment of Plan or Awards. The Committee or the Board of Directors may amend,
suspend, or terminate the Plan or any portion thereof at any time, provided such amendment is made
with shareholder approval if and to the extent such approval is necessary to comply with any legal
requirement, including for these purposes any approval requirement which is a requirement for the
performance-based compensation exception under Code Section 162(m). In no event shall the
Committee increase the amount payable pursuant to an Award after it has been granted. In addition,
no amendment shall be made to an outstanding Award without written consent of the affected
Participant. Notwithstanding the preceding, the Committee may amend or modify the Plan or any
outstanding Award to the extent necessary to cause the Plan or such Award to comply with the
requirements of Section 409A of the Code or the Listed Company Manual of the New York Stock
Exchange.
12.12 Exclusion from Computation of Compensation for Other Purposes. By acceptance of
an applicable Award under this Plan, subject to the conditions of such Award, each Participant
shall be considered in agreement that all shares of Stock sold or awarded and all Options granted
under this Plan shall be considered extraordinary, special incentive compensation and will not be
included as earnings, wages, salary or compensation in any pension, welfare, life
insurance, or other employee benefit arrangement of the Company except as otherwise specifically
provided in such arrangement.
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12.13 Legend. In it sole and complete discretion, the Committee may elect to legend
certificates representing Shares sold or awarded under the Plan, to make appropriate references to
the restrictions imposed on such Shares.
12.14 Special Provisions for Certain Participants. All Award Agreements for
Participants subject to Section 16(b) of the Exchange Act shall be deemed to include any such
additional terms, conditions, limitations and provisions as Rule 16b-3 requires, unless the
Committee in its discretion determines that any such Award should not be governed by Rule 16b-3.
All performance-based Awards to Covered Participants shall be deemed to include any such additional
terms, conditions, limitations and provisions as are necessary to comply with the performance-based
compensation exemption of Code Section 162(m), unless the Committee, in its discretion, determines
that any such Award is not intended to qualify for the exemption for performance-based compensation
under Code Section 162(m).
12.15 Unfunded Plan. The Plan shall be unfunded and the Company shall not be required
to segregate any assets in connection with any Awards under the Plan. Any liability of the Company
to any person with respect to any Award under the Plan or any Award Agreement shall be based solely
upon the contractual obligations that may be created as a result of the Plan or any such award or
agreement. No such obligation of the Company shall be deemed to be secured by any pledge of,
encumbrance on, or other interest in, any property or asset of the Company or any Subsidiary.
Nothing contained in the Plan or any Award Agreement shall be construed as creating in respect of
any Participant (or beneficiary thereof or any other person) any equity or other interest of any
kind in any assets of the Company or any Subsidiary or creating a trust of any kind or a fiduciary
relationship of any kind between the Company, any Subsidiary and/or any such Participant, any
beneficiary thereof or any other person.
12.16 Conflict with Employment Agreement. Except as specified in Article X or
otherwise restricted under Section 12.2 or 12.14, to the extent any provision of this Plan
conflicts with any provision of a written employment agreement between an Employee and the Company,
the material terms of which have been approved by the Board, the provisions of the employment
agreement shall control.
12.17 Gender and Number. Where the context admits, words in the masculine gender
shall include the feminine gender, the plural shall include the singular and the singular shall
include the plural.
12.18 Severability. In the event any provision of this Plan shall be held to be
illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining
parts of this Plan, and this Plan shall be construed and endorsed as if such illegal or invalid
provision had never been contained in this Plan.
12.19 Effect of Headings. The descriptive headings of the Articles and Sections of
this Plan are inserted for convenience of reference and identification only and do not constitute a
part of this Plan for purposes of interpretation.
12.20 No Liability. No member of the Board or the Committee or any officer or
Employee shall be personally liable for any action, omission or determination made in good faith in
connection with this Plan. The Company shall indemnify and hold harmless the members of the
Committee, the Board and the officers and Employees, and each of them, from and against any and all
loss which results from liability to which any of them may be subjected by reason of any act or
conduct (except willful misconduct or gross negligence) in their official capacities in connection
with the
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administration of this Plan, including all expenses reasonably incurred in their defense, in
case the Company fails to provide such defense. By participating in this Plan, each Employee
agrees to release and hold harmless the Company and its Subsidiaries (and their respective
directors, officers and employees), the Board and the Committee, from and against any tax or other
liability, including without limitation, interest and penalties, incurred by the Employee in
connection with his participation in this Plan.
12.21 Limited Effect of Plan Restatement. Notwithstanding anything to the contrary
contained in the Plan, this instrument shall not alter or adversely affect a Participants rights
under any Award granted to the Participant prior to the Effective Date without the Participants
written consent.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan as
of the 15th day of December, 2010.
PIEDMONT NATURAL GAS COMPANY, INC. |
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By: | /s/ Kevin M. OHara | |||
Kevin M. OHara | ||||
Senior Vice President Corporate and Community Affairs | ||||
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