Attached files
Exhibit 10.16
Xylem
Senior Executive Severance Pay Plan
EFFECTIVE AS OF 10/31/11
1. Purpose
The purpose of this Xylem Senior Executive Severance Pay Plan (Plan) is to assist in
occupational transition by providing severance pay for employees covered by this Plan whose
employment is terminated under conditions set forth in this Plan.
The Plan first became effective as of October 31, 2011 following the spin-off of Xylem Inc.
from ITT Corporation (the Predecessor Corporation) on October 31, 2011. The Predecessor
Corporation maintained a similar plan prior to the spin-off (the Predecessor Plan), and the Plan
was created to continue service accruals under the Predecessor Plan. The Plan shall remain in
effect as provided in Section 12 hereof, and Executives shall receive full credit for their service
and participation with the Predecessor Corporation as provided in Section 4 hereof.
2. Covered Employees
Covered employees under this Plan (Executives) are full-time, regular salaried employees of
Xylem Inc. (Xylem) and of any subsidiary company (Xylem Subsidiary) (collectively or
individually as the context requires Company) who are United States citizens, or who are employed
in the United States, in Band A currently (Senior Vice Presidents and above to be further defined
by the Xylem Compensation and Personnel Committee) at any time within the two year period
immediately preceding the date the Company selects as the Executives last day of active employment
(Scheduled Termination Date).
3. Severance Pay Upon Termination of Employment
If the Company terminates an Executives employment, the Executive shall be provided severance
pay in accordance with the terms of this Plan except where the Executive:
is terminated for cause,
accepts employment or refuses comparable employment with a purchaser as provided in Section
8, Divestiture,
is terminated with a Scheduled Termination Date on or after the Executives Normal
Retirement Date as defined herein, or
voluntarily terminates employment with the Company prior to the Scheduled Termination Date.
No severance pay will be provided under this Plan where the Executive terminates employment
by:
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voluntarily resigning,
voluntarily retiring, or
failing to return from an approved leave of absence (including a medical leave of absence).
No severance pay will be provided under this Plan upon any termination of employment as a
result of the Executives death or disability.
Normal Retirement Date shall mean the first of the month which coincides with or follows the
Executives 65th birthday.
4. Schedule of Severance Pay
Severance pay will be provided in accordance with the following Schedule of Severance Pay
which sets forth the months of Base Pay which is provided to an Executive based upon the
Executives Years of Service as of the Scheduled Termination Date.
Years of Service | Months of Base Pay | |||
Less than 4 |
12 | |||
4 |
13 | |||
5 |
14 | |||
6 |
15 | |||
7 |
16 | |||
8 |
17 | |||
9 |
18 | |||
10 |
19 | |||
11 |
20 | |||
12 |
21 | |||
13 |
22 | |||
14 |
23 | |||
15 or more |
24 |
Base Pay shall mean the annual base salary rate payable or in effect with respect to the
Executive at the Scheduled Termination Date divided by twelve (12) months. Such annual base salary
rate shall in no event be less than the highest annual base salary rate paid or in effect with
respect to the Executive at any time during the twenty-four month (24) period immediately preceding
the Scheduled Termination Date.
Years of Service shall mean the total number of completed years of employment since the
Executives Xylem system service date to the Scheduled Termination Date, rounded to the nearest
whole year; provided that, for the purposes of Years of Service, service shall include years with
the Predecessor Corporation. The Xylem system service date is the date from which employment in the
Xylem system is recognized for purposes of determining eligibility for vesting under the applicable
Company retirement plan covering the Executive on the Scheduled Termination Date; provided,
however, that for purposes of service under the Predecessor Plan,
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employment in the Predecessor Corporations system is recognized for purposes of determining
eligibility for vesting under the applicable retirement plan covering the Executive.
Notwithstanding the above Schedule of Severance Pay, (i) in no event shall months of Base Pay
provided to an Executive exceed the number of months remaining between the Scheduled Termination
Date and the Executives Normal Retirement Date or (ii) shall severance pay exceed the equivalent
of twice the Executives total annual compensation during the year immediately preceding the
Scheduled Termination Date.
Notwithstanding any other provision of the Plan to the contrary, all prior service and
participation by an Executive with the Predecessor Corporation shall be credited in full towards an
Executives service and participation with the Company.
5. Form of Payment of Severance Pay
Severance pay shall be paid in the form of periodic payments according to the regular payroll
schedule (Severance Pay). Severance Pay will commence within 60 days following the Scheduled
Termination Date.
In the event of an Executives death during the period the Executive is receiving Severance
Pay, the amount of severance pay remaining shall be paid in a discounted lump sum to the
Executives spouse or to such other beneficiary or beneficiaries designated by the Executive in
writing, or, if the Executive is not married and failings such designation, to the estate of the
Executive. Any discounted lump sum paid under this Plan shall be equal to the present value of the
remaining periodic payments of severance pay as determined by Xylem using an interest rate equal to
the prime rate at Citibank in effect on the date of the Executives death.
If an Executive is receiving Severance Pay, the Executive must continue to be available to
render to the Company reasonable assistance, consistent with the level of the Executives prior
position with the Company, at times and locations that are mutually acceptable. In requesting such
services, the Company will take into account any other commitments which the Executive may have.
After the Scheduled Termination Date and normal wind up of the Executives former duties, the
Executive will not be required to perform any regular services for the Company. In the event the
Executive secures other employment during the period the Executive is receiving Severance Pay, the
Executive must promptly notify the Company.
Severance Pay will cease if an Executive is rehired by the Company.
6. Benefits During Severance Pay
As long as an Executive is receiving Severance Pay, except as provided in this Section or in
Section 7, the Executive will continue to be eligible for participation in Company employee benefit
plans in accordance with the provisions of such plans as in effect on the Scheduled Termination
Date. An Executive will not be eligible to participate in any Company tax qualified retirement
plans, non-qualified excess or supplemental benefit plans, short-term or long-term disability
plans, the Company business travel accident plan or any new employee benefit plan or any
improvement to any existing employee benefit plan adopted by the Company after the Scheduled
Termination Date.
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7. Excluded Executive Compensation Plans, Programs, Arrangements, and Perquisites
During the period an Executive is receiving Severance Pay, the Executive will not be eligible
to accrue any vacation or participate in any (i) bonus program, (ii) special termination programs,
(iii) tax or financial advisory services, (iv) new awards under any stock option or stock related
plans for executives (provided that the Executive will be eligible to exercise any outstanding
stock options in accordance with the terms of any applicable stock option plan), (v) new or revised
executive compensation programs that may be introduced after the Scheduled Termination Date and
(vi) any other executive compensation program, plan, arrangement, practice, policy or perquisites
unless specifically authorized by Xylem in writing. The period during which an Executive is
receiving Severance Pay does not count as service for the purpose of any Xylem long term incentive
award program unless otherwise provided in plan documents previously approved by the Board of
Directors or Compensation and Personnel Committee.
8. Divestiture
If a Xylem Subsidiary or division of Xylem or a portion thereof at which an Executive is
employed is sold or divested and if (i) the Executive accepts employment or continued employment
with the purchaser or (ii) refuses employment or continued employment with the purchaser on terms
and conditions substantially comparable to those in effect immediately preceding the sale or
divestiture, the Executive shall not be provided severance pay under this Plan. The provisions of
this Section 8 apply to divestitures accomplished through sales of assets or through sales of
corporate entities.
9. Disqualifying Conduct
If during the period an Executive is receiving Severance Pay, the Executive (i) engages in any
activity which is inimical to the best interests of the Company; (ii) disparages the Company; (iii)
fails to comply with any Company Covenant Against Disclosure and Assignment of Rights to
Intellectual Property; (iv) without the Companys prior consent, induces any employees of the
Company to leave their Company employment; (v) without the Companys prior consent, engages in,
becomes affiliated with, or becomes employed by any business competitive with the Company; or (vi)
fails to comply with applicable provisions of the Xylem Code of Conduct or applicable Xylem
Corporate Policies or any applicable Xylem Subsidiary Code or policies, then the Company will have
no further obligation to provide severance pay.
10. Release
The Company shall not be required to make or continue any severance payments under this Plan
unless the Executive executes and delivers to Xylem within 45 days following the Scheduled
Termination Date a release, satisfactory to Xylem, in which the Executive discharges and releases
the Company and the Companys directors, officers, employees and employee benefit plans from all
claims (other than for benefits to which Executive is entitled under any Company employee benefit
plan) arising out of Executives employment or termination of employment.
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11. Administration of Plan
This Plan shall be administered by Xylem, who shall have the exclusive right to interpret this
Plan, adopt any rules and regulations for carrying out this Plan as may be appropriate and decide
any and all matters arising under this Plan, including but not limited to the right to determine
appeals. Subject to applicable Federal and state law, all interpretations and decisions by Xylem
shall be final, conclusive and binding on all parties affected thereby.
12. Termination or Amendment
Xylem may terminate or amend this Plan (Plan Change) at any time except that no such Plan
Change may reduce or adversely affect severance pay for any Executive whose employment terminates
within two years of the effective date of such Plan Change provided that the Executive was a
covered employee under this Plan on the date of such Plan Change.
13. Offset
Any severance pay provided to an Executive under this Plan shall be offset in a manner
consistent with Section 15 by reducing such severance pay by any severance pay, salary
continuation, termination pay or similar pay or allowance which Executive receives or is entitled
to receive (i) under any other Company plan, policy practice, program, arrangement; (ii) pursuant
to any employment agreement or other agreement with the Company; (iii) by virtue of any law, custom
or practice. Any severance pay provided to Executive under this Plan shall also be offset by
reducing such severance pay by any severance pay, salary continuation pay, termination pay or
similar pay or allowance received by the Executive as a result of any prior termination of
employment with the Company.
Coordination of severance pay with any pay or benefits provided by any applicable Xylem
short-term or long-term disability plan shall be in accordance with the provisions of those plans.
14. Miscellaneous Except as provided in this Plan, the Executive shall not be entitled to any
notice of termination or pay in lieu thereof.
In cases where severance pay is provided under this Plan, pay in lieu of any unused current
year vacation entitlement will be paid to the Executive in a lump sum.
Benefits under this Plan are paid for entirely by the Company from its general assets.
This Plan is not a contract of employment, does not guarantee the Executive employment for any
specified period and does not limit the right of the Company to terminate the employment of the
Executive at any time.
The section headings contained in this Plan are included solely for convenience of reference
and shall not in any way affect the meaning of any provision of this Plan
15. Section 409A
This Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as
amended (the Code) and will be interpreted in a manner intended to comply with
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Section 409A of the Code. Notwithstanding anything herein to the contrary, (i) if at the time
of the Executives termination of employment with the Company the Executive is a specified
employee as defined in Section 409A of the Code (and any related regulations or other
pronouncements thereunder) and the deferral of the commencement of any payments or benefits
otherwise payable hereunder as a result of such termination of employment is necessary in order to
prevent any accelerated or additional tax under Section 409A of the Code, then the Company will
defer the commencement of the payment of any such payments or benefits hereunder (without any
reduction in such payments or benefits ultimately paid or provided to the Executive) until a date
that is six months following the Executives termination of employment with the Company (or the
earliest date as is permitted under Section 409A of the Code), at which point all payments deferred
pursuant to this Section 15 shall be paid to the Executive in a lump sum and (ii) if any other
payments of money or other benefits due hereunder could cause the application of an accelerated or
additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if
deferral will make such payment or other benefits compliant under Section 409A of the Code, or
otherwise such payment or other benefits shall be restructured, to the extent possible, in a
manner, determined by the Company, that does not cause such an accelerated or additional tax. To
the extent any reimbursements or in-kind benefits due under this Plan constitute deferred
compensation under Section 409A of the Code, any such reimbursements or in-kind benefits shall be
paid in a manner consistent with Treas. Reg.
Section 1.409A-3(i)(1)(iv). Each payment made under this Plan shall be designated as a
separate payment within the meaning of Section 409A of the Code. The Company shall consult with
Executives in good faith regarding the implementation of the provisions of this section; provided
that neither the Company nor any of its employees or representatives shall have any liability to
Executives with respect thereto.
16. Adoption Date and Amendments
This Plan was adopted by Xylem on October 31, 2011 (Adoption Date) and does not apply to any
termination of employment which occurred or which was communicated to the Executive prior to the
Adoption Date.