Item 2 – Approve, on an Advisory Basis, the Compensation of the Company’s Named Executive Officers
This year, the Company is seeking that the stockholders approve the compensation of the Company’s named executive officers (commonly referred to as
“say-on-pay”) as described in the “Compensation Discussion and Analysis” section, the tabular disclosure regarding named executive officer compensation and the narrative description accompanying such disclosure. As initially
approved by our stockholders at the annual meeting of stockholders in 2011, and consistent with the Board’s recommendation, we are submitting this proposal on an annual basis. This vote is advisory only, meaning it is non-binding on the
Company; however, the Board and Compensation Committee will review and carefully consider the results when evaluating future compensation decisions.
We encourage
stockholders to review the “Compensation Discussion and Analysis” section beginning on page
16
. As described in detail under “Compensation Discussion and Analysis,” our compensation program is designed to
attract and retain the highest caliber executives possible and to motivate and reward them for achieving results that create stockholder value. The Compensation Committee believes that the Company’s compensation program and practices reflect a
pay-for-performance philosophy designed to align our compensation program and practices with our stockholders’ long-term interests.
Item 2 – Approve, on an Advisory Basis, the Compensation of the Company’s Named Executive
Officers
The Board endorses the Company’s executive compensation program and recommends that the stockholders vote in favor of the following resolution:
RESOLVED, that the stockholders approve the compensation of the Company’s named executive officers as disclosed pursuant to
Item 402 of SEC Regulation S-K, including as described under the “Compensation Discussion and Analysis” section, as well as the accompanying compensation tables and the related narrative disclosure, in the Company’s 2017 Proxy
Statement.
For 2016, the performance goals and the actual achievement of each of the
financial components is included in the chart below:
Item 3 – Advisory Vote on the Frequency of an Advisory Vote on Executive Compensation
ITEM 3 – ADVISORY VOTE ON THE
FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
In connection with the advisory vote on executive compensation discussed on page 14, we are also asking stockholders
to vote on whether the say-on-pay vote should occur every one, two or three years. As with the say-on-pay vote, the vote on the frequency of the say-on-pay vote is advisory, or non-binding. For the reasons discussed below, the Board recommends that
the stockholders select a frequency of every year.
During its evaluation, our Board considered that an annual advisory vote on executive compensation allows our
stockholders to provide the Company with regular input on the Company’s compensation practices.
Although the vote is non-binding, our Board and Compensation Committee will take into account the outcome of the vote when
making future decisions regarding the Company’s executive compensation policies and procedures and how often the Company should submit to stockholders an advisory vote to approve executive compensation.
Stockholders may vote to hold the say-on-pay vote every one, two or three years, or they may abstain. Accordingly, you will not be voting to approve or disapprove the
Board’s recommendation.
OUR BOARD UNANIMOUSLY
RECOMMENDS STOCKHOLDERS SELECT
“ONE YEAR” ON THE PROPOSAL
RECOMMENDING THE FREQUENCY OF ADVISORY
VOTES ON EXECUTIVE
COMPENSATION.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
ITEM 4 – APPROVE THE RENEWAL AND RESTATEMENT OF THE WESCO INTERNATIONAL, INC. 1999 LONG-TERM INCENTIVE
PLAN
Our Board of Directors (the “Board”) unanimously recommends a vote FOR the approval of the renewal and
restatement of the
WESCO International, Inc. 1999 Long-Term Incentive Plan, as further described in this proposal.
OUR BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE
APPROVAL OF THE RENEWAL AND RESTATEMENT OF THE
WESCO INTERNATIONAL, INC. 1999 LONG-TERM INCENTIVE PLAN.
The WESCO International, Inc. 1999 Long-Term Incentive Plan (the “1999 Plan”) was initially approved by our Board
and our stockholders to be effective as of May 11, 1999. The 1999 Plan was amended and restated effective as of May 21, 2003, again amended and restated effective May 21, 2008, and again amended and restated May 30, 2013 (the
“LTIP”). The Compensation Committee of the Board (the “Committee”) has
now recommended and the Board has approved, subject to stockholder approval, a further amendment and restatement of the LTIP (as so amended and restated, the “Restated LTIP”) in order
to increase the number of shares available under the Restated LTIP and to make certain other changes to the Restated LTIP as described below.
The Restated LTIP
Effective March 2017, the Committee recommended and the Board approved, subject to stockholder approval, the Restated LTIP
that would increase the maximum number of shares of common stock of the Company (the “Common Stock”) that may be issued under the Restated LTIP by 1,680,000 to 3,429,818 shares (which includes 1,749,818 shares previously authorized and
approved by shareholders but not yet awarded as of March 31, 2017). Included on page 47 (see “Updated Equity Compensation Information”) are updates to our equity compensation program as of March 31, 2017. The Committee believes
that increasing the total number of shares available for awards under the Restated LTIP is necessary to ensure that a sufficient number of shares will be available to fund our compensation programs for the next
several years, taking into account the Company’s growth strategy and expansion and acquisition plans. If the amendment is approved by our stockholders, we plan to register the offer and sale
of the 1,680,000 additional shares of Common Stock on a registration statement on Form S-8. If shares of Common Stock are changed into or exchanged for a different kind or number of shares, for example in the event of a stock split, stock
dividend or other recapitalization, then the number and kind of shares which may be issued under the Restated LTIP, the limitations on the number of shares which may be made subject to awards and the terms and provisions of outstanding awards will
be appropriately adjusted to reflect such change in the Common Stock.
Highlights of the Restated LTIP
The Restated LTIP includes key provisions designed to protect stockholder interests, promote effective corporate governance
and reflect use of corporate governance best practices including, but not limited to, the following:
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No Discounted Options or Stock Appreciation Rights. Stock options and stock appreciation rights may not be granted with exercise prices lower than the fair market value of the underlying shares on the grant date.
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No Repricing of Underwater Options. The terms of the Plan do not allow for the repricing of “underwater” stock options or stock appreciation rights (SARs) without shareholder approval, including the
cancellation and reissuance of new options or SARs in exchange for stock options or SARs whose strike price is above the then-current fair value of the Common Stock.
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No Share Recycling for Net Exercises or Tax Withholding. Shares surrendered or withheld to pay either the exercise price of an award or to withhold taxes in respect of an Award do not become available for issuance as
future awards under our plan.
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Director Award Sub-Limits. Awards granted to non-employee Directors of the Company under the Restated LTIP are subject to separate and smaller annual award limitations.
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Compensation Recoupment Policy. All awards granted under the Restated LTIP are subject to any compensation recoupment policy that may be adopted by the Company.
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No Evergreen Provision. There is no “evergreen” or automatic replenishment provision pursuant to which the shares authorized for issuance under the Plan are automatically replenished.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
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No Automatic Grants. The Plan does not provide for automatic grants to any participant.
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Minimum Vesting. The Plan requires a vesting schedule of at least one-year for Awards.
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No Payment of Dividends on Unvested Awards. The Plan does not allow dividends to be paid on unvested Awards unless and until the Awards vest.
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Stockholder approval is also necessary to allow the Company to make awards that are intended to satisfy the requirements for tax deductibility under Section 162(m)
of the Code, which limits the annual federal tax deduction for compensation paid to our Chief Executive Officer and the other three most highly compensated executive officers (other than the chief financial officer) to $1 million. Certain
performance-based compensation is excluded from this limitation. The Restated LTIP was designed to allow us to make awards that are intended to comply with
these performance-based compensation exclusions. However, in order to preserve this ability to make qualified performance-based awards, we are required to obtain stockholder approval of the
performance goals in the Restated LTIP every five years. As such, we are seeking stockholder approval of the Restated LTIP, which contains annual limitations and performance criteria for performance-based awards to maintain compliance with
Section 162(m) of the Code.
The following is a summary of the Restated LTIP. This summary is qualified in its entirety by reference to the complete text of the
Restated LTIP, which is attached to this proxy statement as Appendix A.
If the Restated LTIP is approved by our stockholders, all outstanding awards under the LTIP
will be deemed to be outstanding awards under the Restated LTIP and no new awards may be made under the LTIP. If the proposal is not adopted the LTIP will continue in effect according to its existing terms.
Shares Reserved Under the Restated LTIP
In 1999, 2003, 2008, and 2013, we received stockholder approval for issuance under the LTIP for a number of shares of
Common Stock equal to the sum of (1) 8,556,000 shares, (2) shares of Common Stock carried forward from the pool of shares available for issuance under predecessor stock option plans under which no further grants are being made and
(3) shares used by participants to pay the exercise price and/or withholding taxes in connection with awards grated under such predecessor plans. From this amount initially reserved for issuance, 1,749,818 shares were uncommitted and available
for issuance as of March 31, 2017 as shown on page 47. This Proposal seeks to add an additional 1,680,000 shares to be available for issuance under the Restated LTIP.
In a single calendar year, a participant cannot receive awards under the Restated LTIP (a) of more than 1,000,000 shares of Common Stock (whether through grants of
options, stock appreciation rights, restricted shares, restricted stock units, performance awards, or other awards of Common Stock or rights with respect thereto); or (b) of more than $5,000,000 with respect to short-term cash incentive awards.
Notwithstanding the foregoing, a participant who is a non-employee Director may not be granted awards under subsection (a) above in respect of a number of shares of Common Stock for which the grant date fair value (as computed for financial
reporting purposes), when aggregated with cash compensation for service as a
non-
employee director of the Company during such period, does not exceed $750,000.
The total number of shares of
Common Stock authorized to be issued under the Restated LTIP will be reduced by 1 share of Common Stock for every 1 share that is subject to an option or stock appreciation right granted under the Restated LTIP on or after the effective date of the
Restated LTIP, and 1.83 shares of Common Stock for every 1 share that was subject to an award other than an option or stock appreciation right granted on or after the effective date of the Restated LTIP.
Shares subject to expired or forfeited awards continue to be available for grant under the Restated LTIP. Any shares of Common Stock that again become available for grant
in this manner will be added back as 1 share of Common Stock if such shares were subject to options or stock appreciation rights granted under the Restated LTIP, and as 1.83 shares of Common Stock if such shares were subject to an award other than
options or stock appreciation rights granted under the Restated LTIP. Shares of Common Stock surrendered by participants or withheld by the Company after the effective date of the Restated LTIP to pay all or a portion of the exercise price with
respect to option awards and/or withholding taxes with respect to any awards shall not be subject to new awards under the Restated LTIP, and stock-settled stock appreciation rights shall be settled on a gross (rather than on a “net”)
basis.
Term of the Restated LTIP; Shares to be Issued
Following approval by our stockholders, the Restated LTIP will remain effective until May 31, 2027 unless terminated
earlier by the Board. The shares of Common Stock to be issued or delivered under the Restated LTIP will be authorized and
unissued shares or previously issued and outstanding shares of Common Stock reacquired by the Company. On April 7, 2017, the closing price of the Common Stock on the New York Stock Exchange
was $69.80 per share.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
Administration
The Restated LTIP is administered by the Committee. The Committee determines the employees who will be eligible for and
granted awards, determines the amount and type of awards, establishes rules and guidelines relating to the Restated LTIP, establishes, modifies and determines terms and conditions of awards, imposes restrictive covenants, corrects any
inconsistencies and takes such other action as may be necessary for the proper administration of the Restated LTIP. The Nominating and Governance Committee is responsible for assessing
non-employee Director compensation and for determining equity-based awards granted to non-employee Directors.
Eligibility and Participation
Any key employee of the Company or its subsidiaries may be selected by the Committee to receive an award under the Restated
LTIP. Non-employee Directors are eligible for awards under the Restated LTIP, and on an annual basis, the
Nominating and Governance Committee determines the amount of such awards to the Company’s non-employee Directors. Presently there are approximately 200 employees and Directors who are
participating in the LTIP.
Indemnification
Each Board member, Committee member appointed by the Board, or officer of the Company to whom authority was delegated in
accordance with the Restated LTIP will be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such person in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Restated LTIP and against and from any and all amounts paid by him or her in
settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action,
suit, or proceeding against him or her;
provided
that he or she must give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf
; provided, however,
that the foregoing indemnification will not apply to any loss, cost, liability, or expense that is a result of his or her own willful misconduct. These indemnification rights
are not exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
Stock Options
The Committee may grant to a participant incentive stock options that qualify under Section 422 of the Code, options
which do not qualify as incentive stock options (“non-qualified stock options”) or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting and exercise provisions, will be determined
by the Committee in its discretion, except that the exercise price for options must be equal to or greater than the fair market value of the Common Stock on the date of grant.
In the case of non-qualified option awards intended to qualify as “performance-based” for purposes of
Section 162(m) of the Code, performance targets will include specified levels of one or more of the Performance Goals (as defined below under “Performance-Based Awards”).
No more than 800,000 of the total shares of Common Stock reserved under the Restated LTIP may be awarded as incentive stock options.
Stock Appreciation Rights
Stock appreciation rights may be granted by the Committee to a participant either separate from or in tandem with stock
options. A stock appreciation right entitles the participant to receive, upon its exercise, a payment equal to (i) the excess of the fair market value of a share of Common Stock on the exercise date over the exercise price of the stock
appreciation rights, multiplied by (ii) the number of shares of Common Stock with respect to which the stock appreciation right is exercised. The exercise price of a stock appreciation right is determined by the Committee, except that the
exercise price (i) must be equal to or greater than the fair market value of the Common Stock on the date of grant and
(ii) in the case of stock appreciation rights granted in tandem with stock options, must not be less than the exercise price of the related stock option. Upon exercise of a stock
appreciation right, payment will be made in cash or shares of Common Stock, or a combination thereof, as determined at the discretion of the Committee.
In the case
of stock appreciation rights intended to qualify as “performance-based” for purposes of Section 162(m) of the Code, performance targets will include specified levels of one or more of the Performance Goals (as defined below under
“Performance-Based Awards”).
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
Restricted Shares and
Restricted Stock Units
The Committee may award to a participant shares of Common Stock subject to specified restrictions. Restricted shares are
subject to forfeiture and are not transferable until the participant meets certain conditions such as continued employment over a specified forfeiture period (the “Forfeiture Period”) and/or attains specified performance targets over the
Forfeiture Period. The Committee may also grant restricted stock units representing the right to receive shares of Common Stock in the future subject to the achievement of one or more goals relating to the completion of service by the Participant
and/or the achievement of performance or other objectives during the Forfeiture Period.
During the Forfeiture Period, (i) restricted stock awards may be
eligible to receive dividends and (ii) restricted stock unit awards may be eligible to receive dividend equivalent rights. If awarded, such dividends or dividend equivalent rights must be subject to the same restrictions as applicable to the
underlying award.
The Committee, at its sole discretion, may waive all restrictions with respect to an award of restricted shares or
restricted stock units under certain circumstances (including the death, disability, or retirement of a participant, or a material change in circumstances arising after the date of grant) subject to such terms and conditions as it deems appropriate.
Any performance targets applicable to restricted share or restricted stock units will be determined by the Committee, but in the case of awards intended to qualify
as “performance-based” for purposes of Section 162(m) of the Code will include specified levels of one or more of the Performance Goals (as defined below under “Performance-Based Awards”).
Performance Awards
The Committee may grant performance awards to participants under such terms and conditions as the Committee deems
appropriate. A performance award entitles a participant to receive a payment from the Company, the amount of which is based upon the attainment of predetermined performance targets over a specific award period. Performance awards may be paid in
cash, shares of Common Stock or a combination thereof, as set forth in the award agreement.
Award periods and performance targets will be determined by the Committee. In the case of performance awards intended to
qualify as “performance-based” for purposes of Section 162(m) of the Code, performance targets will include specified levels of one or more of the Performance Goals (as defined below under “Performance-Based Awards”).
Other Stock-Based Awards
The Committee may make other awards of stock purchase rights or cash awards, Common Stock awards or other types of awards
that are valued in whole or in part by reference to the value of the Common Stock. The Committee will determine the conditions and terms that apply to these awards.
In the case of other stock-based awards intended to qualify as “performance-based” for purposes of
Section 162(m) of the Code, performance targets will include specified levels of one or more of the Performance Goals (as defined below under “Performance-Based Awards”).
Short-Term Cash Awards
The Committee may make performance-based annual cash incentive awards to employees using any performance criteria the
Committee deems appropriate. For those employees whom the Committee determines to be subject to Section 162(m) of the Code, however, annual cash incentive awards that are intended to qualify as “performance-based” compensation may be
granted by the Company. Such short-term cash awards will be based only on attainment of specified levels of one or more of the Performance Goals (as defined below under “Performance-Based
Awards”) and will otherwise be subject to the requirements of Section 162(m) and the regulations thereunder.
Performance-Based Awards
Awards granted under the Restated LTIP may be structured to meet the performance-based compensation exception to
Section 162(m) of the Code. Such awards will be subject to the achievement of specified Performance Goals and must be
granted in accordance with the requirements of Section 162(m) of the Code in order to qualify as performance-based compensation.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
Performance Goals under the Restated LTIP include any of the following (in absolute terms or relative to one or more other
companies or indices): total shareholder return, operating income, return on stockholders’ equity, return on investment, return on invested assets, stock price appreciation, earnings before interest, taxes, depreciation and amortization, cash
flow, including operating cash flow, free cash flow, discounted cash flow return on investment, and cash flow in excess of cost of capital, sales growth, margin improvement, income before taxes (IBT), IBT margin, working capital performance,
earnings per share, growth in earnings per share, expense targets, productivity targets or ratios, net earnings, net income, net income per share, or gross revenue or revenue by pre-defined business segment, revenue backlog, ratio of operating
expenses to operating revenues, pre- or post-tax profit margins, market share, economic value added (income in excess of cost of capital), attainment of specific milestones in connection with strategic initiatives and/or customer satisfaction, in
each case, with respect to the Company, its subsidiaries, a business unit by or within which the participant is primarily providing services, or a combination thereof.
We are also asking shareholders to approve the Restated LTIP to satisfy the stockholder approval requirements of Section 162(m) of the Code (Section 162(m)) and to
approve the materials terms of the performance goals for awards that may be granted under the Restated LTIP as required under Section 162(m). In general, Section 162(m) places a limit on the deductibility for federal income tax purposes of
the compensation paid to our Chief Executive Officer or any of our three other most highly compensated executive officers (other than our Chief Financial Officer). Under Section 162(m), compensation paid to such persons in excess of $1 million
in a taxable year generally is not deductible. However, compensation that qualifies as “performance-based” under Section 162(m) does not count against the $1 million deduction limitation. One of the requirements of
“performance-based” compensation for purposes of Section 162(m) is that the material terms of the plan
under which compensation may be paid be disclosed to and approved by our public stockholders.
For purposes of
Section 162(m), the material terms include: (a) the employees eligible to receive compensation, (b) a description of the business criteria on which the performance goals may be based, and (c) the maximum amount of compensation
that can be paid to an employee under the performance goals. Each of these aspects of the Restated LTIP is discussed below, and stockholder approval of the Restated LTIP will constitute approval of the material terms of the Restated LTIP pursuant to
the stockholder approval requirements of Section 162(m).
Note that stockholder approval of the Restated LTIP is only one of several requirements under
Section 162(m) that must be satisfied for amounts realized under the Restated LTIP to qualify for the “performance-based” compensation exemption under Section 162(m), and will enable us to (but will not require us to or guarantee
that we will be able to) grant awards intended to qualify as performance-based compensation within the meaning of Section 162(m) and preserve the deductibility of these awards for federal income tax purposes. Nothing in this proposal precludes
us or the Committee from making any payment or granting awards that do not qualify for tax deductibility under Section 162(m).
Stockholder approval of the
Restated LTIP is necessary in order for us to (1) meet the stockholder approval requirements of the NYSE, (2) take tax deductions for certain compensation resulting from awards granted thereunder intended to qualify as performance-based
compensation under Section 162(m), and (3) grant incentive stock options (ISOs) thereunder.
If the stockholders do not approve of the Restated LTIP, it
will not be implemented and the LTIP will continue in accordance with its terms.
Change in Control
Unless otherwise provided in the applicable award agreement, in the event of a change in control of the Company as defined
in the Restated LTIP, (i) all option awards and stock appreciation rights will become immediately fully vested and exercisable, (ii) all restrictions or limitations (including risks of forfeiture and
deferrals, subject to the provisions of Section 409A of the Code) on all outstanding restricted share awards and restricted stock unit awards will immediately lapse, and (iii) all
performance awards will become immediately fully payable at the maximum level of performance.
Amendment and Termination of the Restated LTIP
The Board has complete power and authority to amend or terminate the Restated LTIP at any time
; provided
that no
amendment or termination of the Restated LTIP may materially adversely affect the right of a participant under an award without the consent of the participant. The Board shall not, without approval by the stockholders of the Company, make any
amendment which requires stockholder approval under the Code or under any other applicable law or rule of any stock exchange on which the Common Stock is listed. Notwithstanding any provision of the Restated LTIP, except in connection with
adjustments to reflect changes in capitalization,
the terms of outstanding options and stock appreciation rights may not be amended or modified, without stockholder approval, to reduce the exercise price, to cancel the option or stock
appreciation rights when the exercise price exceeds the fair market value of the underlying Common Stock in exchange for another award, or in any other circumstance meeting the definition of a “repricing” under the rules of the New York
Stock Exchange (or any similar rule of a stock exchange on which the Common Stock is then listed).
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
No awards will be granted under the Restated LTIP after the termination of the Restated LTIP, but the termination of the
Restated LTIP will not have any other effect and any award outstanding at the time of the termination of the Restated LTIP
may be exercised after termination of the Restated LTIP at any time prior to the expiration date of such award to the same extent such award would have been exercisable had the Restated LTIP not
been terminated.
Certain Federal Income Tax Considerations
The following is a general description of the United States federal income tax consequences to participants and the Company
relating to incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares, restricted stock units, performance awards, other stock-based awards and short-term cash incentive awards that may be granted under the
Restated LTIP. The Restated LTIP is not qualified under Section 401(a) of the Code. This discussion only applies to U.S. citizens and/or residents and does not purport to cover all tax consequences relating to awards granted under the Restated
LTIP. This description is intended for use by our stockholders in determining how to vote at our Annual Meeting and not as tax advice to persons who receive awards under the Restated LTIP.
Incentive Stock Options.
A participant generally will not recognize income, and the Company will not be entitled to a deduction from income, at the time of grant
of an incentive stock option. If the option is exercised during employment, or within three months thereafter (or one year in the case of a permanently and totally disabled employee), the participant generally will not recognize any income and the
Company will not be entitled to a deduction. However, the excess of the fair market value of the shares on the date of exercise over the exercise price generally is included in computing the participant’s alternative minimum taxable income.
Generally, if the participant disposes of shares acquired by exercise of an incentive stock option within either two years after the date of grant or one year after
the date of exercise, the participant will recognize ordinary income, and the Company will be entitled to a deduction equal to the excess of the fair market value of the shares on the date of exercise over the exercise price (limited generally to
the gain on the sale). The balance of any gain or loss will be treated as a capital gain or loss to the participant. If shares are disposed of after the two year and one year periods described above expire, the Company will not be entitled to any
deduction, and the entire gain or loss for the participant will be treated as a long-term capital gain or loss.
Non-Qualified Stock Options.
A participant
generally will not recognize income, and the Company will not be entitled to a deduction from income, at the time of grant of a non-qualified stock option. When the option is exercised, the participant will recognize ordinary income equal to the
difference, if any, between the aggregate exercise prices paid and the fair market value, as of the date the option is exercised, of the shares received. The participant’s tax basis in shares acquired upon exercise will equal the exercise price
paid plus the amount recognized by the participant as ordinary income. The Company
generally will be entitled to a federal income tax deduction in the tax year in which the option is exercised, equal to the ordinary income recognized by the participant as described above. If
the participant holds shares acquired through exercise of a non-qualified stock option for more than one year after the exercise of the option, the gain or loss realized upon the sale of those shares generally will be a long-term capital gain or
loss. The participant’s holding period for shares acquired upon the exercise of an option will begin on the date of exercise.
Stock Appreciation Rights.
A participant generally will not recognize income, and the Company will not be entitled to a deduction from income, at the time of grant of a stock appreciation right. When the stock appreciation right is exercised, the participant will recognize
ordinary income equal to the difference between the aggregate grant price and the fair market value, as of the date the stock appreciation right is exercised, of the Company’s Common Stock. The participant’s tax basis in shares acquired
upon exercise of a stock-settled stock appreciation right will equal the amount recognized by the participant as ordinary income. The Company generally will be entitled to a federal income tax deduction in the year in which the stock appreciation
right is exercised, equal to the ordinary income recognized by the participant as described above. If the participant holds shares acquired through exercise of a stock-settled stock appreciation right for more than one year after the exercise of the
stock appreciation right, the gain or loss realized upon the sale of those shares will be a long-term capital gain or loss. The participant’s holding period for shares acquired upon the exercise of a stock-settled stock appreciation right will
begin on the date of exercise.
Restricted Shares.
Restricted shares subject to a substantial risk of forfeiture results in income recognition equal to the
excess of the fair market value of shares over the purchase price (if any) only at the time the restrictions lapse (unless the participant elects to accelerate recognition as of the date of grant through an election under Section 83(b) of the
Code). The Company generally will have (at the time the participant recognizes income) a corresponding deduction.
Restricted Stock Units.
Restricted stock
units and dividend equivalents generally are subject to tax at the time of payment and the Company generally will have a corresponding deduction when the participant recognizes income.
Performance Awards.
Performance awards generally are subject to tax at the time of payment. The Company will generally have (at the time the participant recognizes
income) a corresponding deduction.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
Other Stock-Based Awards.
Other stock-based awards generally are subject to tax at the time of payment. The Company
generally will have (at the time the participant recognizes income) a corresponding deduction.
Short-Term Cash Incentive Awards.
Short-term cash
incentive awards generally are subject to tax at the time of payment. The Company generally will have (at the time the participant recognizes income) a corresponding deduction.
Compliance with Section 409A of the Code.
The American Jobs Creation Act of 2004, enacted on October 22, 2004, revised the federal income tax law
applicable to certain types of awards that may be granted under the Restated LTIP. To the extent applicable, it is intended that the Restated LTIP and any grants made under the Restated LTIP either be exempt from, or, in the alternative, comply with
the provisions of Section 409A of the Code, including the exceptions for stock rights and short-term
deferrals. The Company intends to administer the Restated LTIP and any grants made thereunder in a manner consistent with the requirements of Section 409A of the Code.
Section 162(m) of the Code.
Stockholder approval of the Restated LTIP is sought under applicable exchange requirements and additionally so that the
compensation payable under the Restated LTIP that is intended to qualify as performance-based compensation under Section 162(m) of the Code will be treated as such. If the Restated LTIP and the Performance Goals thereunder are approved by the
stockholders and the Restated LTIP is administered in accordance with the performance-based compensation exception under Section 162(m) of the Code, payment of the full amounts calculated under the Restated LTIP should be deductible by the
Company for federal income tax purposes.
Plan Benefits
The future amounts that will be received by grantees under the Restated LTIP are not determinable. The equity awards
granted to our named executive officers under the LTIP and outstanding as of December 31, 2016 are set forth in the “Outstanding Equity Awards at Year-End” table found on page 30 of this Proxy Statement. As of April 7, 2017
(i) our executive officers as a
group (4 officers) held outstanding stock equity grants for 1,154,899 shares, (ii) our non-employee Directors as a group (7 directors) held outstanding stock equity grants for 125,896
shares, and (iii) all of our employees other than our executive officers (217 employees) held outstanding stock equity grants for 1,569,761 shares.
Vote Required
Approval of the Restated LTIP will require the affirmative vote of at least a majority in voting interest of the stock
holders present in person or by proxy and voting at the Annual Meeting, assuming the presence of a quorum. If the stockholders do not approve of the Restated LTIP, it will not be implemented and the
LTIP will continue in accordance with its terms. We reserve the right to adopt such other compensation plans and programs as we deem appropriate and in the best interests of the Company and its
stockholders.
Updated Equity Compensation Information
As of March 31, 2017, 48,775,653 shares of common stock, par value $.01 per share, of the Company were outstanding. As of March 31, 2017, 1,749,818 shares
of common stock were reserved under the LTIP for future equity awards.
The following table sets forth a summary of stock-settled stock appreciation rights and related
information for the three months ended March 31, 2017:
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Awards
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Weighted
average
exercise
price
|
|
|
Weighted
Average
Remaining
Contractual
Terms (In
years)
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|
Outstanding at December 31, 2016
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2,439,487
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|
$
|
52.62
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|
|
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|
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Granted
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|
443,731
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|
|
|
|
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|
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Exercised
|
|
|
(448,171
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)
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|
|
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|
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Forfeited
|
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|
(23,378
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)
|
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|
|
|
|
|
|
|
|
Outstanding at March 31, 2017
|
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|
2,411,669
|
|
|
$
|
58.10
|
|
|
|
6.74
|
|
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WESCO International, Inc. - 2017 Proxy Statement
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Item 4 – Approve the Renewal and Restatement of the WESCO International, Inc. 1999
Long-Term
Incentive Plan
The following table sets
forth a summary of time-based restricted stock units and related information for the three months ended March 31, 2017:
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Awards
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Weighted
average
fair value
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Unvested at December 31, 2016
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257,096
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$
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57.47
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Granted
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98,680
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Vested
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(43,169
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)
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|
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|
Forfeited
|
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|
(4,747
|
)
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|
|
|
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|
Unvested at March 31, 2017
|
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307,860
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|
$
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58.23
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|
Performance shares are awards for which the vesting will occur based on market or performance conditions. The following table sets forth a
summary of performance-based awards for the three months ended March 31, 2017:
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Awards
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Weighted
average
fair value
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Unvested at December 31, 2016
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149,320
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|
$
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60.36
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|
Granted
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39,978
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|
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Vested
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—
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Forfeited
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(35,122
|
)
|
|
|
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Unvested at March 31, 2017
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154,176
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$
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59.99
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The unvested performance-based awards in the table above include 77,088 shares in which vesting of the ultimate number of shares is
dependent upon WESCO’s total stockholder return in relation to the total stockholder return of a select group of peer companies over a three-year period. Vesting of the remaining 77,088 shares of performance-based awards in the table above is
dependent upon the three-year average growth rate of WESCO’s net income. Additional historical information regarding performance shares is shown below:
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Performance-Based Awards (Shares/Units)
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# of Shares/Units
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|
|
Unvested at December 31, 2013
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92,484
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|
|
Granted
|
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44,046
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|
Vested
|
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—
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Forfeited
|
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(6,526
|
)
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Unvested at December 31, 2014
|
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130,004
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|
|
Granted
|
|
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59,661
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|
|
Vested
|
|
|
(38,869
|
)
|
|
Forfeited
|
|
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(36,276
|
)
|
|
Unvested at December 31, 2015
|
|
|
114,520
|
|
|
Granted
|
|
|
91,768
|
|
|
Vested
|
|
|
—
|
|
|
Forfeited
|
|
|
(56,968
|
)
|
|
Unvested at December 31, 2016
|
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|
149,320
|
|
|
|
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48 |
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WESCO International, Inc. - 2017 Proxy Statement
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Item 5 – Ratify The Appointment of Independent Registered Public Accounting Firm
ITEM 5 – RATIFY THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board has selected PricewaterhouseCoopers LLP as our independent registered public accounting
firm for the year ending December 31, 2017.
We are submitting the appointment of the independent registered public accounting firm to you for ratification at
the Annual Meeting. Although ratification of this appointment is not
legally required, our Board believes it is appropriate for you to ratify this selection. In the event that you do not ratify the selection of PricewaterhouseCoopers LLP as our Company’s
independent registered public accounting firm, our Audit Committee may reconsider its selection.
OUR BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR
THE YEAR ENDING DECEMBER 31, 2017.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 5 – Ratify The Appointment of Independent Registered Public Accounting Firm
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Appointment of Independent Registered Public
Accounting Firm
Our Audit Committee has appointed PricewaterhouseCoopers LLP as our independent registered public accounting firm to audit
our 2017 financial statements.
PricewaterhouseCoopers LLP has served as our independent registered public accounting firm since 1994. In addition to
performing the audit, Representatives of PricewaterhouseCoopers LLP will be present at the Annual Meeting, and will have an opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
Independent Registered Public Accounting Firm
Fees and Services
Aggregate fees for all professional services rendered to us by PricewaterhouseCoopers LLP for the years ended
December 31, 2016 and 2015 were as follows:
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(In millions)
|
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2016
|
|
|
2015
|
|
|
Audit fees
|
|
$
|
1.7
|
|
|
$
|
1.8
|
|
|
Audit-related fees
|
|
$
|
0.1
|
|
|
|
—
|
|
|
Tax fees
|
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|
|
|
|
|
|
|
|
Compliance
|
|
$
|
0.5
|
|
|
$
|
0.7
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|
|
Planning and consulting
|
|
$
|
0.4
|
|
|
$
|
0.2
|
|
|
Other fees
|
|
|
—
|
|
|
|
—
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|
|
|
|
$
|
2.7
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|
|
$
|
2.7
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|
The audit fees for the years ended December 31, 2016 and 2015 were for professional services rendered for the
integrated audits of our consolidated financial statements and of our internal control over financial reporting, reviews of quarterly consolidated financial statements and statutory audits.
Tax compliance fees for the years ended December 31, 2016 and 2015 were for services related to the preparation and review of tax returns.
Tax planning and consulting fees for the years ended December 31, 2016 and 2015 were for services involving advice and consultation on tax matters.
Audit Committee Pre-Approval Policies and
Procedures
Our Audit Committee has the sole authority to pre-approve, and has policies and procedures that require the pre-approval by
them of, all fees paid for services performed by our independent registered public accounting firm. At the beginning of each year, the Audit Committee approves the proposed services for the year, including the nature, type and scope of services and
the
related fees. Audit Committee pre-approval is also obtained for any other engagements that arise during the course of the year. During 2016 and 2015, all of the audit and non-audit services
provided by PricewaterhouseCoopers LLP were pre-approved by the Audit Committee.
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WESCO International, Inc. - 2017 Proxy Statement
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Item 5 – Ratify The Appointment of Independent Registered Public Accounting Firm
Report of the Audit Committee
It is the responsibility of the Company’s management to prepare the Company’s financial statements and to develop and maintain adequate systems of internal
accounting and financial controls. The Audit Committee is responsible for assisting the Board in its oversight of the quality and integrity of the Company’s financial statements and the independent audit thereof, its oversight of the
Company’s accounting and financial reporting principles, policies and internal controls, and the performance of the internal audit function, evaluating the independence, qualifications and performance of the Company’s independent
registered public accounting firm, and evaluating the performance of the Company’s internal auditors.
In this context, the Audit Committee has reviewed and
discussed the Company’s audited financial statements for the year ended December 31, 2016 with management and the independent registered public accounting firm. Management represented to the Audit Committee that the financial statements of
the Company were prepared in accordance with generally accepted accounting principles. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standards No. 1301,
“Communication with Audit Committees,” as adopted by the PCAOB. The Audit Committee also discussed with management their assessment of the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2016, and the independent registered public accounting firm’s opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016.
In addition, the Audit Committee has discussed with its independent registered public accounting firm, the independent
registered public accounting firm’s independence from the Company and its management, including the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB
regarding the independent accountant’s communications with the Audit Committee concerning independence, which have been received by the Audit Committee. The Audit Committee discussed with the Company’s internal auditors and independent
registered public accounting firm the overall scope and plan for their respective audits. The Audit Committee meets with the internal auditors and independent registered public accounting firm, with and without management present, to discuss the
results of their audits, including their audit of the Company’s internal controls and the overall quality of the Company’s financial reporting. In reliance on the reviews and discussions referred to above, the Audit Committee recommended
to our Board and our Board has approved, that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2016, for filing with the Securities and Exchange Commission. The Audit Committee and
our Board also appointed PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2017.
Respectfully Submitted:
T
HE
A
UDIT
C
OMMITTEE
Steven A. Raymund,
Chairman
Matthew J. Espe
Lynn M. Utter
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WESCO International, Inc. - 2017 Proxy Statement
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Appendix A
WESCO INTERNATIONAL, INC. 1999 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective May 31, 2017)
ARTICLE I
PURPOSE AND ADOPTION OF THE
PLAN
1.01 Purpose.
The purpose of the WESCO International, Inc. 1999 Long-Term Incentive Plan (as the same may be amended from time to time,
the “Plan”) is to assist WESCO International, Inc., a Delaware corporation (the “Company”), and its Subsidiaries (as defined below) in attracting and retaining highly competent key employees and non-employee directors, and to act
as an incentive in motivating selected key employees and non-employee directors of the Company and its Subsidiaries to achieve long-term corporate objectives.
1.02 Adoption and Term.
The Plan was initially approved by the Board of Directors of the Company (the “Board”) and the stockholders of the Company
to be effective as of May 11, 1999, the effective date of the initial public offering of the Company’s Common Stock. The Company amended and restated the Plan effective as of May 21, 2003 and May 21, 2008, and again amended and
restated the Plan effective as of May 30, 2013. This is a further amendment and complete restatement of the Plan effective May 31, 2017 (the “Effective Date”), the date of approval of the Plan as restated herein by the stockholders of
the Company. The Plan shall remain in effect until the tenth anniversary of the Effective Date, unless terminated earlier by the Board. In addition, the Performance Goals (as defined below) must be reapproved by the Company’s stockholders at
least every five (5) years for purposes of complying with the deductibility requirements of Section 162(m) of the Code (as defined below) applicable to performance-based awards to “covered employees” as defined in
Section 162(m) and the regulations thereunder.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, capitalized
terms shall have the following meanings:
2.01 Acquiring Corporation
shall have the meaning given to such term in Section 11.08(b).
2.02 Award
means any grant to a Participant of one or a combination of Non-Qualified Stock Options, Incentive Stock Options, or Stock Appreciation Rights
described in Article VI, Restricted Shares or Restricted Stock Units described in Article VII, Performance Awards described in Article VIII, other stock-based Awards described in Article IX, and Short-Term Cash Incentive Awards described in Article
X.
2.03 Award Agreement
means a written agreement between the Company and a Participant or a written notice from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under the Plan.
2.04 Award Period
means, with respect to an Award, the period
of time determined by the Committee and set forth in the Award Agreement during which specified target performance goals must be achieved or other conditions set forth in the Award Agreement must be satisfied. Notwithstanding any other provision of
the Plan to the contrary, no Award Period shall be less than one year from the Date of Grant; provided that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Common
Stock available pursuant to Article IV may be granted to any one or more Participants without respect to the minimum Award Period requirements of this sentence.
2.05 Beneficiary
means an individual, trust or estate who or which, by a written designation of the Participant filed with the Company or by operation of
law, succeeds to the rights and obligations of the Participant under the Plan and an Award Agreement upon the Participant’s death.
2.06 Board
shall have the meaning given to such term in Section 1.02.
2.07 Change in Control
means the first to occur of the following events after
the Effective Date: (a) the consummation of an acquisition by any person, entity or “group” (as defined in Section 13(d) of the Securities Exchange Act of 1934, as amended), other than the Company and its Subsidiaries, any
employee benefit plan of the Company or its Subsidiaries,
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WESCO International, Inc. - 2017 Proxy Statement
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of 30% or more of the combined voting power of the Company’s then outstanding voting securities; (b) the consummation of a merger or consolidation of the Company, as a result of which
persons who were stockholders of the Company immediately prior to such merger or consolidation, do not, immediately thereafter, own, directly or indirectly, more than 70% of the combined voting power entitled to vote generally in the election of
directors of the merged or consolidated company; (c) the liquidation or dissolution of the Company; (d) the consummation of a sale, transfer or other disposition of all or substantially all of the assets of the Company to one or more
persons or entities that are not, immediately prior to such sale, transfer or other disposition, affiliates of the Company; and (e) during any period of not more than two years, individuals who constitute the Board as of the beginning of the
period and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (a) or (b) of this sentence or a director whose initial assumption of
office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board (including
without limitation any settlement thereof)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were directors
at such time or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board.
2.08 Code
means the Internal Revenue Code of 1986, as amended. References to a section of the Code include that section and any comparable section or sections of any future legislation that amends, supplements or supersedes said section.
2.09 Committee
means the Compensation Committee of the Board.
2.10
Company
shall have the meaning given to such term in Section 1.01.
2.11 Common Stock
means Common Stock of the Company.
2.12 Date of Grant
means the date as of which the Committee grants an Award. If the Committee contemplates an immediate grant to a Participant, the Date of
Grant shall be the date of the Committee’s action. If the Committee contemplates a date on which the grant is to be made other than the date of the Committee’s action, the Date of Grant shall be the date so contemplated and set forth in or
determinable from the records of action of the Committee
; provided, however,
that the Date of Grant shall not precede the date of the Committee’s action.
2.13 Effective Date
shall have the meaning given to such term in Section 1.02.
2.14 Exchange Act
means the Securities Exchange Act of 1934, as amended.
2.15 Exercise Price
shall have the meaning given to such term in Section 6.01(b).
2.16 Extraordinary Termination
shall have the meaning given to such term in Section 6.03(e)(i).
2.17 Fair Market Value
means, a price that is based on the opening, closing, actual, high, low, or average selling prices of a share of Common Stock on the
New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its
discretion; provided that the Exercise Price of an Option or Stock Appreciation Right shall not be less than the closing market price of a share of Common Stock on such exchange, on the Date of Grant. Such definition of Fair Market Value shall be
specified in the Award Agreement and may differ depending on whether Fair Market Value is in reference to the grant, exercise, vesting, or settlement or payout of an Award. If, however, the accounting standards used to account for equity awards
granted to Participants are substantially modified subsequent to the Effective Date or the shares of Common Stock are not traded on an established stock exchange, the Committee shall have the ability to determine Fair Market Value in good faith
based on all the relevant facts and circumstances, by the reasonable application of a reasonable valuation method in accordance with Section 409A of the Code and Treasury Regulation §1.409A-1(b)(5)(iv)(B), as the Board or Committee will
select and apply at the time of the Date of Grant of the Award, time of exercise, vesting, or other date of calculation.
2.18 Incentive Stock Option
means a stock option within the meaning of Section 422 of the Code.
2.19 Merger
means any merger, reorganization, consolidation, share
exchange, transfer of assets, or other transaction having similar effect involving the Company.
2.20 Non-Qualified Stock Option
means a stock option
that is not an Incentive Stock Option.
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WESCO International, Inc. - 2017 Proxy Statement
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2.21 Options
means all Non-Qualified Stock Options and Incentive Stock Options.
2.22 Participant
means a person designated to receive an Award under the Plan in accordance with Section 5.01.
2.23 Performance Awards
means Awards granted in accordance with Article VIII.
2.24 Performance Goals
means performance goals and conditions applicable to an Award that the Committee establishes prior to the grant of such Award based
on the attainment of one or more or a combination of any of the following (in absolute terms or relative to one or more other companies or indices): total shareholder return, operating income, return on stockholders’ equity, return on
investment, return on invested assets, return on invested capital, stock price appreciation, earnings before interest, taxes, depreciation and amortization, cash flow, including operating cash flow, free cash flow, discounted cash flow return on
investment, and cash flow in excess of cost of capital, sales growth, gross margin, billing margin, margin improvement, income before taxes (IBT), IBT margin, working capital performance, earnings per share, growth in earnings per share, expense
targets, productivity targets or ratios, net earnings, net income, net income per share, or gross revenue or revenue by pre-defined business segment, backlog, ratio of operating expenses to operating revenues, pre- or post-tax profit margins, market
share, economic value added (income in excess of cost of capital), attainment of specific milestones in connection with strategic initiatives and/or customer satisfaction, in each case, with respect to the Company, its Subsidiaries, a business unit
by or within which the Participant is primarily providing Services, or a combination thereof.
2.25 Permanent Disability
means a physical or mental
disability or infirmity that prevents the performance of a Participant’s employment-related duties lasting (or likely to last, based on competent medical evidence presented to the Committee) for a period of not less than six (6) months,
unless a longer period is required by applicable law. Notwithstanding the foregoing, for purposes of the provisions of the Plan relating to Incentive Stock Options, “Permanent Disability” shall have the same meaning as under
Section 22(e)(3) of the Code. The Committee’s reasoned and good faith judgment of Permanent Disability shall be final and shall be based on such competent medical evidence as shall be presented to it by such Participant or by any physician
or group of physicians or other competent medical expert employed by the Participant or the Company to advise the Committee.
2.26 Plan
shall have the
meaning given to such term in Section 1.01.
2.27 Restricted Shares
means Common Stock subject to restrictions imposed in connection with Awards
granted under Article VII.
2.28 Restricted Stock Unit
means units representing the right to receive Common Stock in the future subject to restrictions
imposed in connection with Awards granted under Article VII.
2.29 Retirement
means a Participant’s retirement at or after age 65.
2.30 Service
means the provision of personal services to the Company or a Subsidiary in the capacity of (a) an employee, (b) a non-employee
director, or (c) as an independent contractor or consultant. A Participant’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders Service to the Company or a Subsidiary,
a transfer of the Participant among the Company and a Subsidiary, or a change in the Company or Subsidiary for which the Participant renders such Service,
provided
in each case that there is no interruption or termination of the
Participant’s Service.
2.31 Stock Appreciation Rights
means Awards granted in accordance with Article VI.
2.32 Subsidiary
means a subsidiary of the Company within the meaning of Section 424(f) of the Code.
ARTICLE III
ADMINISTRATION
3.01 Committee.
The Plan shall be administered by the Committee. The Committee shall have exclusive and final authority in each determination,
interpretation or other action affecting the Plan and its Participants. The Committee shall have the sole discretionary authority to interpret the Plan, to establish and modify administrative rules for the Plan, to impose such conditions and
restrictions on Awards as it determines appropriate, and to take such steps in connection with the Plan and Awards granted hereunder as it may deem necessary or advisable. The Committee may, subject to compliance with applicable legal requirements,
with respect to Participants who are not subject to Section 16(b) of the
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Exchange Act or Section 162(m) of the Code, delegate such of its powers and authority under the Plan as it deems appropriate to designated officers or employees of the Company. In addition,
the Board may exercise any of the authority conferred upon the Committee hereunder. In the event of any such delegation of authority or exercise of authority by the Board, references in the Plan to the Committee shall be deemed to refer to the
delegate of the Committee or the Board, as the case may be.
3.02 Indemnification.
Each person who is or shall have been a member of the Board, or a
Committee appointed by the Board, or an officer of the Company to whom authority was delegated in accordance with the Plan shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her,
provided
he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf
; provided, however,
that the foregoing
indemnification shall not apply to any loss, cost, liability, or expense that is a result of his or her own willful misconduct. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
ARTICLE IV
SHARES
4.01 Number of Shares Issuable.
The total number of shares of Common Stock authorized to be issued under the Plan shall be the sum of (a) 1,680,000
shares of Common Stock authorized and approved for issuance under the Plan as of the Company’s 2017 annual meeting of shareholders, plus (b) the 3,952,211 shares of Common Stock previously authorized and approved for issuance under the
Plan, less the number of shares underlying Awards made under the Plan prior to the Effective Date (calculated as described below). The total number of shares of Common Stock authorized to be issued under the Plan shall be reduced by 1 share of
Common Stock for every 1 share that is subject to an Option, Stock Appreciation Right, or other appreciation-only Award granted under the Plan on or after the Effective Date, and 1.83 shares of Common Stock for every 1 share that was subject to a
Restricted Share, Restricted Stock Unit, or other full-value stock-based Award granted on or after the Effective Date. The number of shares available for issuance under the Plan and as specific types of Awards shall be subject to adjustment in
accordance with Section 11.08. The shares to be offered under the Plan shall be authorized and unissued shares of Common Stock, or issued shares of Common Stock that will have been reacquired by the Company.
4.02 Shares Subject to Terminated Awards.
Shares of Common Stock covered by any (a) Options or Stock Appreciation Rights that are forfeited or expire
unexercised under Article VI, and (b) Restricted Shares, Restricted Stock Units, Performance Awards, other stock-based Awards that are forfeited under Articles VII, VIII, or IX may be subject to new Awards under the Plan. Shares of Common Stock
surrendered by Participants or withheld by the Company after the Effective Date to pay all or a portion of the Exercise Price and/or withholding taxes with respect to any Awards shall not be subject to new Awards under the Plan, and stock-settled
Stock Appreciation Rights shall be settled on a gross (rather than on a “net”) basis. Any shares of Common Stock that again become available for grant pursuant to this Section 4.02 shall be added back as 1 share of Common Stock if
such shares were subject to Options, Stock Appreciation Rights, or other appreciation-only Awards granted under the Plan, and as 1.83 shares of Common Stock if such shares were subject to a Restricted Share, Restricted Stock Unit, or other
full-value stock-based Award granted under the Plan.
ARTICLE V
PARTICIPATION
5.01 Eligible Participants.
Participants in the Plan shall be such key employees and non-employee directors of the Company and its Subsidiaries as the Committee, in its sole discretion, may designate from time to time. The Committee’s designation of a Participant
in any year shall not require the Committee to designate such person to receive Awards in any other year. The designation of a Participant to receive an Award under one portion of the Plan does not require the Committee to include such Participant
under other portions of the Plan. The Committee shall consider such factors as it deems pertinent in selecting Participants and in determining the types and amounts of their respective Awards. The
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Committee may grant Awards from time to time on a discretionary basis and/or provide for automatic (but not reload) Awards on a formula basis to a Participant or designated group of Participants.
Subject to adjustment in accordance with Section 11.08, during any calendar year, no Participant shall be granted Awards in respect of more than 1,000,000 shares of Common Stock (whether through grants of Options, Stock Appreciation Rights,
Restricted Shares, Restricted Stock Units, Performance Awards, or other Awards of Common Stock or rights with respect thereto); provided that, in the case of a Participant who is a non-employee director, that limit shall be a number of shares of
Common Stock for which the grant date fair value (as computed for financial reporting purposes), when aggregated with cash compensation for service as a non-employee director of the Company during such period, does not exceed $750,000.
ARTICLE VI
STOCK OPTIONS
6.01 Option Awards.
(a) Grant of
Options.
The Committee may grant, to such Participants as the Committee may select, Options entitling the Participants to purchase shares of Common Stock from the Company in such numbers, at such prices, and on such terms and subject to such
conditions, not inconsistent with the terms of the Plan, as may be established by the Committee. The terms of any Option granted under the Plan shall be set forth in an Award Agreement.
(b) Exercise Price of Options.
The exercise price of each share of Common Stock which may be purchased upon exercise of any
Option granted under the Plan (the “Exercise Price”) shall be determined by the Committee;
provided, however,
that, except in the case of any substituted Options described in Section 11.08(c), the Exercise Price shall in all
cases be equal to or greater than the Fair Market Value on the Date of Grant.
(c) Designation of Options.
Except as
otherwise expressly provided in the Plan, the Committee may designate, at the time of the grant of an Option, such Option as an Incentive Stock Option or a Non-Qualified Stock Option;
provided, however,
that an Option may be designated as an
Incentive Stock Option only if the applicable Participant is an employee of the Company or a Subsidiary on the Date of Grant.
(d) Special Incentive Stock Option Rules.
No Participant may be granted Incentive Stock Options under the Plan (or any other
plans of the Company and its Subsidiaries) that would result in Incentive Stock Options to purchase shares of Common Stock with an aggregate Fair Market Value (measured on the Date of Grant) of more than $100,000 first becoming exercisable by such
Participant in any one calendar year. Notwithstanding any other provision of the Plan to the contrary, no Incentive Stock Option shall be granted to any person who, at the time the Option is granted, owns stock (including stock owned by application
of the constructive ownership rules in Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary, unless at the time the Incentive Stock Option is granted
the Exercise Price is at least 110% of the Fair Market Value on the Date of Grant of the Common Stock subject to the Incentive Stock Option and the Incentive Stock Option by its terms is not exercisable for more than five (5) years from the
Date of Grant. No more than a total of 800,000 shares of Common Stock may be awarded to Participants under the Plan as Incentive Stock Options.
(e) Rights as a Stockholder.
A Participant or a transferee of an Option pursuant to Section 11.04 shall have no rights
as a stockholder with respect to the shares of Common Stock covered by an Option until that Participant or transferee shall have become the holder of record of any such shares, and no adjustment shall be made with respect to any such shares of
Common Stock for dividends in cash or other property or distributions of other rights on the Common Stock for which the record date is prior to the date on which that Participant or transferee shall have become the holder of record of any shares
covered by such Option;
provided, however,
that Participants are entitled to the adjustments set forth in Section 11.08.
6.02 Stock Appreciation
Rights.
(a) Stock Appreciation Right Awards.
The Committee is authorized to grant to any Participant one or
more Stock Appreciation Rights. Such Stock Appreciation Rights may be granted either independent of or in tandem with Options granted to the same Participant (including Options granted under this Plan or any other plans of the Company). Stock
Appreciation Rights granted in tandem with Options may be granted simultaneously with, or, in the case of Non-Qualified Stock Options, subsequent to, the grant to such Participant of the related Option;
provided, however,
that: (i) any
Option covering any share of Common Stock shall expire and not be exercisable upon the exercise of any Stock Appreciation Right with respect to the same share, (ii) any Stock Appreciation Right covering any share of Common
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Stock shall expire and not be exercisable upon the exercise of any related Option with respect to the same share, and (iii) an Option and Stock Appreciation Right covering the same share of
Common Stock may not be exercised simultaneously. Upon exercise of a Stock Appreciation Right with respect to a share of Common Stock, the Participant shall be entitled to receive an amount equal to the excess, if any, of (A) the Fair Market
Value of a share of Common Stock on the date of exercise over (B) the Exercise Price of such Stock Appreciation Right established in the Award Agreement, which amount shall be payable as provided in Section 6.02(c).
(b) Exercise Price.
The Exercise Price established under any Stock Appreciation Right granted under this Plan shall be
determined by the Committee;
provided, however,
that in any event the Exercise Price shall be equal to or greater than the Fair Market Value on the Date of Grant and, in the case of Stock Appreciation Rights granted in tandem with Options,
the Exercise Price shall not be less than the Exercise Price of the related Option and, upon exercise of Stock Appreciation Rights, the number of shares subject to exercise under any related Option shall automatically be reduced by the number of
shares of Common Stock represented by the Option or portion thereof that are surrendered as a result of the exercise of such Stock Appreciation Rights.
(c) Payment of Incremental Value.
Any payment that may become due from the Company by reason of a Participant’s
exercise of a Stock Appreciation Right may be paid to the Participant as determined by the Committee (i) all in cash, (ii) all in Common Stock, or (iii) in any combination of cash and Common Stock. In the event that all or a portion
of the payment is made in Common Stock, the number of shares of Common Stock delivered in satisfaction of such payment shall be determined by dividing the amount of such payment or portion thereof by the Fair Market Value on the date of exercise. No
fractional share of Common Stock shall be issued to make any payment in respect of Stock Appreciation Rights; if any fractional share would be issuable, the combination of cash and Common Stock payable to the Participant shall be adjusted as
directed by the Committee to avoid the issuance of any fractional share.
(d) Substitution of Stock Appreciation Rights for
Options.
The Committee shall have the ability, without Participant consent, to substitute Stock Appreciation Rights paid only in shares of Common Stock for outstanding Options (including Options granted under this Plan or any other plans of
the Company);
provided
the terms of the substituted Stock Appreciation Rights are the same as the terms for the Options and the difference between the Fair Market Value of the underlying shares of Common Stock and the Exercise Price of the
Stock Appreciation Rights is equivalent to the difference between the Fair Market Value of the underlying shares of Common Stock and the Exercise Price of the Options. If this provision creates material adverse accounting consequences for the
Company, it may be considered null and void in the sole discretion of the Committee.
(e) Rights as a Stockholder.
A
Participant shall have no rights as a stockholder with respect to the shares of Common Stock covered by an Award of Stock Appreciation Rights unless and until that Participant shall have become the holder of record of any such shares, and no
adjustment shall be made with respect to any such shares of Common Stock for dividends in cash or other property or distributions of other rights on the Common Stock for which the record date is prior to the date on which that Participant shall have
become the holder of record of any shares covered by such Stock Appreciation Rights;
provided, however
, that Participants are entitled to the adjustments set forth in Section 11.08.
6.03 Terms of Stock Options and Stock Appreciation Rights
(a) Conditions on Exercise.
An Award Agreement with respect to Options and Stock Appreciation Rights may contain such
waiting periods, exercise dates and restrictions on exercise (including, but not limited to, periodic installments) as may be determined by the Committee at the Date of Grant;
provided,
that for Awards granted to Participants after the
Effective Date, and subject to the provisions of any applicable retirement, severance or employment agreement or such terms as may be approved by the Committee relating to the Participant’s Permanent Disability, death or other termination of
Service, the vesting schedule (i) for a non-performance-based Option or Stock Appreciation Right Award shall not be less than three years or (ii) for a performance-based Option or Stock Appreciation Right Award shall not be less than one
year;
provided, further,
that, notwithstanding the foregoing, but subject to Section 11.08(c) of the Plan, Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Common Stock available
pursuant to Article IV may be granted to any one or more Participants without respect to the minimum vesting provision of this sentence. Notwithstanding the foregoing but subject to Section 2.04, the vesting of an Option or a Stock Appreciation
Right may, but need not, lapse in installments.
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(b) Duration of Options and Stock Appreciation Rights.
Options and Stock
Appreciation Rights shall terminate after the first to occur of the following events:
(i) Expiration of the Option and Stock
Appreciation Rights as provided in the related Award Agreement;
(ii) Termination of the Award as provided in Section 6.03(e)
following the Participant’s termination of Service; or
(iii) Ten years from the Date of Grant;
provided
that if on the date an outstanding, vested Option or Stock Appreciation Rights would expire, the exercise of the Option or
Stock Appreciation Rights would violate applicable securities laws, the expiration date applicable to the Option or Stock Appreciation Rights will be extended to a date that is thirty (30) calendar days after the date the exercise of the Option
or Stock Appreciation Rights would no longer violate applicable securities laws.
(c) Acceleration of Exercise Time.
The
Committee, in its sole discretion, shall have the right (but shall not in any case be obligated), exercisable at any time after the Date of Grant, to permit the exercise of any Option and Stock Appreciation Rights prior to the time such Option and
Stock Appreciation Rights would otherwise become exercisable under the terms of the related Award Agreement.
(d) Extension of
Exercise Time.
In addition to the extensions permitted under Section 6.03(e) in the event of termination of Service, the Committee, in its sole discretion, shall have the right (but shall not in any case be obligated), exercisable on or
at any time after the Date of Grant, to permit the exercise of any Option or Stock Appreciation Right after its expiration date described in Section 6.03(e), subject, however, to the provisions of Sections 6.03(b).
(e) Exercise of Options and Stock Appreciation Rights Upon Termination of Service.
(i)
Extraordinary Termination
. Unless otherwise provided in the Award Agreement or otherwise determined by the Committee at the
Date of Grant, in the event that a Participant’s Service terminates by reason of the Participant’s death, Permanent Disability or Retirement (each an “Extraordinary Termination”), then any Options and Stock Appreciation Rights
held by the Participant and then exercisable shall remain exercisable solely until the first to occur of (A) the first anniversary of the Participant’s termination of Service or (B) the expiration of the term of the Option or Stock
Appreciation Rights, unless the exercise period is extended pursuant to Section 6.03(b) or by the Committee in accordance with Section 6.03(d). Any Options and Stock Appreciation Rights held by the Participant that are not exercisable at
the date of the Extraordinary Termination shall terminate and be cancelled immediately upon such Extraordinary Termination, and any Options and Stock Appreciation Rights described in the preceding sentence that are not exercised within the period
described in such sentence shall terminate and be cancelled upon the expiration of such period.
(ii)
Other Termination of
Service
. Unless otherwise provided in the Award Agreement or otherwise determined by the Committee at or after the Date of Grant, in the event that a Participant’s Service terminates for any reason other than an Extraordinary Termination,
any Options and Stock Appreciation Rights held by such Participant that are exercisable as of the date of such termination shall remain exercisable for a period of 60 days (or, if shorter, during the remaining term of the Options and Stock
Appreciation Rights), unless the exercise period is extended pursuant to Section 6.03(b) or by the Committee in accordance with Section 6.03(d). Any Options and Stock Appreciation Rights held by the Participant that are not exercisable at
the date of the Participant’s termination of Service shall terminate and be cancelled immediately upon such termination, and any Options and Stock Appreciation Rights described in the preceding sentence that are not exercised within the period
described in such sentence shall terminate and be cancelled upon the expiration of such period.
(iii)
Treatment of Incentive Stock
Options
. Notwithstanding the foregoing, in the case of an Incentive Stock Option that may be exercisable under the terms of this Section 6.03(e) or the provisions of the applicable Award Agreement beyond the maximum periods permitted under
Section 422 of the Code, such Options shall be deemed to be Non-Qualified Stock Options.
(f) No Dividends or Dividend
Equivalents
. No dividends or dividend equivalents shall be paid in connection with Options or Stock Appreciation Rights.
6.04 Option and Stock
Appreciation Right Exercise Procedures.
Each Option and Stock Appreciation Right granted under the Plan shall be exercised by written notice to the Company or its designated agent at or before the close of business on the expiration date of
the Award. The Exercise Price of shares purchased upon exercise of an Option
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granted under the Plan shall be paid in full in cash by the Participant pursuant to the Award Agreement;
provided, however,
that in lieu of such cash a Participant may (if authorized by
the Committee) pay the Exercise Price in whole or in part by delivering (actually or by attestation) to the Company shares of the Common Stock (which may include Restricted Shares or shares otherwise issuable in connection with the exercise of the
Option, subject to such rules as the Committee deems appropriate) having a Fair Market Value on the date of exercise of the Option equal to the Exercise Price for the shares being purchased; except that any portion of the Exercise Price representing
a fraction of a share shall in any event be paid in cash. Payment may also be made, in the discretion of the Committee and subject to applicable law, by the delivery (including, without limitation, by fax) to the Company or its designated agent of
an executed irrevocable option exercise form together with irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the shares and deliver the sale or margin loan proceeds directly to the Company to pay for the Exercise
Price. The date of exercise of an Option or Stock Appreciation Right shall be determined under procedures established by the Committee, and as of the date of exercise the person exercising the Option or Stock Appreciation Right shall, as between the
Company and such person, be considered for all purposes to be the owner of the shares of Common Stock with respect to which the Option or Stock Appreciation Right has been exercised. Any part of the Exercise Price paid in cash upon the exercise of
any Option shall be added to the general funds of the Company and may be used for any proper corporate purpose. Unless the Committee shall otherwise determine, any shares of Common Stock transferred to the Company as payment of all or part of the
Exercise Price upon the exercise of any Option shall be held as treasury shares.
6.05 Change in Control.
Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all Options and Stock Appreciation Rights outstanding on the date of such Change in Control shall become immediately and fully exercisable. Unless otherwise determined by the
Committee, the provisions of this Section 6.05 shall not be applicable to any Options and Stock Appreciation Rights granted to a Participant if any Change in Control results from such Participant’s beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of Common Stock.
ARTICLE VII
RESTRICTED SHARES AND RESTRICTED STOCK UNITS
7.01
Restricted Share and Restricted Stock Unit Awards.
The Committee may grant to any Participant a Restricted Share Award consisting of such number of shares of Common Stock on such terms, conditions and restrictions, whether based on
performance standards, periods of Service, retention by the Participant of ownership of specified shares of Common Stock or other criteria, as the Committee shall establish. The Committee may also grant Restricted Stock Units representing the right
to receive shares of Common Stock in the future subject to the achievement of one or more goals relating to the completion of Service by the Participant and/or the achievement of performance or other objectives. With respect to performance-based
Awards of Restricted Shares or Restricted Stock Units intended to qualify for deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code, performance targets will consist of specified
levels of one or more of the Performance Goals. The terms of any Restricted Share and Restricted Stock Unit Awards granted under this Plan shall be set forth in an Award Agreement that shall contain provisions determined by the Committee and not
inconsistent with this Plan.
(a) Issuance of Restricted Shares.
The issuance of shares of Common Stock may be effected
on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange or market system. If actual shares of Common Stock are used, as soon as practicable after the Date of Grant of a Restricted
Share Award by the Committee, the Company shall cause to be transferred on the books of the Company or its designated agent, shares of Common Stock, registered on behalf of the Participant, evidencing the Restricted Shares covered by the Award,
subject to forfeiture to the Company as of the Date of Grant if an Award Agreement with respect to the Restricted Shares covered by the Award is not duly executed by the Participant and timely returned to the Company. All shares of Common Stock
covered by Awards under this Article VII shall be subject to the restrictions, terms and conditions contained in the Plan and the applicable Award Agreements entered into by the appropriate Participants. If the issuance of shares under the Plan is
effected on a non-certificated basis, the issuance of shares to a Participant will be reflected by crediting (by means of a book entry) the applicable number of shares of Common Stock to an account maintained by the Company in the name of such
Participant, which account may be an account maintained by the Company for such Participant under any dividend reinvestment program offered by the Company. Until the lapse or release of all restrictions applicable to an Award of Restricted Shares
the share certificates representing such Restricted Shares, if applicable, may be held in custody by the Company, its designee, or, if the
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certificates bear a restrictive legend, by the Participant. Upon the lapse or release of all restrictions with respect to an Award, one or more share certificates, registered in the name of the
Participant, for an appropriate number of shares, free of any restrictions set forth in the Plan and the related Award Agreement shall be delivered to the Participant.
(b) Stockholder Rights.
Beginning on the Date of Grant of a Restricted Share Award and subject to execution of the related
Award Agreement as provided in Section 7.01(a), and except as otherwise provided in such Award Agreement, the Participant shall become a stockholder of the Company with respect to all shares subject to the Award Agreement and shall have all of
the rights of a stockholder, including, but not limited to, the right to vote such shares and the right to receive dividends;
provided, however,
that any cash or shares of Common Stock distributed as a dividend or otherwise with respect to
any Restricted Shares as to which the restrictions have not yet lapsed, shall be subject to the same restrictions as such Restricted Shares and held or restricted as provided in this Section 7.01.
(c) Restriction on Transferability.
None of the Restricted Shares may be assigned or transferred (other than by will or the
laws of descent and distribution or to an
inter vivos
trust with respect to which the Participant is treated as the owner under Sections 671 through 677 of the Code), pledged or sold prior to the lapse of the restrictions applicable thereto.
(d) Delivery of Shares Upon Vesting.
Upon expiration or earlier termination of the forfeiture period without a
forfeiture and the satisfaction of or release from any other conditions prescribed by the Committee, or at such earlier time as provided under the provisions of Section 7.03, the restrictions applicable to the Restricted Shares shall lapse. As
a condition to the receipt of a Restricted Share or Restricted Stock Unit Award in the form of actual shares of Common Stock, the Committee may require a Participant to execute any stock powers, escrow agreements or other documents. The Committee in
its discretion may establish any conditions, limitations, restrictions, vesting, and forfeiture provisions applicable to Restricted Shares or Restricted Stock Units.
7.02 Terms of Restricted Shares.
(a) Forfeiture of Restricted Shares.
Subject to Sections 7.02(b) and 7.04, Restricted Shares shall be forfeited and returned
to the Company and all rights of the Participant with respect to such Restricted Shares shall terminate unless the Participant continues in the Service of the Company or a Subsidiary until the expiration of the forfeiture period for such Restricted
Shares and satisfies any and all other conditions set forth in the Award Agreement. The Committee shall determine the forfeiture period and any other terms and conditions applicable with respect to any Restricted Share Award;
provided,
that,
for Awards granted to Participants after the Effective Date, and subject to the provisions of any applicable retirement, severance or employment agreement or such terms as may be approved by the Committee relating to the Participant’s Permanent
Disability, death or other termination of Service, the forfeiture period (i) for a non-performance-based Restricted Share Award shall not be less than three years or (ii) for a performance-based Restricted Share Award shall not be less
than one year;
provided, further,
that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Common Stock available pursuant to Article IV may be granted to any one
or more Participants without respect to the minimum forfeiture period provision of this sentence. Notwithstanding the foregoing but subject to Section 2.04, the forfeiture period of a Restricted Share Award may, but need not, lapse in installments.
(b) Waiver of Forfeiture Period.
Notwithstanding anything contained in this Article VII to the contrary, the Committee
may, in its sole discretion, waive the forfeiture period and any other conditions set forth in any Award Agreement under appropriate circumstances (including the death, disability or Retirement of the Participant or a material change in
circumstances arising after the Date of Grant) and subject to such terms and conditions (including forfeiture of a proportionate number of the Restricted Shares) as the Committee shall deem appropriate, unless waiving forfeiture would cause the
Award to no longer qualify for deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code.
7.03
Restricted Stock Units.
Restricted Stock Unit Awards shall be subject to the restrictions, terms and conditions contained in the Plan and the applicable Award Agreements entered into by the appropriate Participants;
provided
,
that for Awards granted to Participants after the Effective Date, and subject to the provisions of any applicable retirement, severance or employment agreement or such terms as may be approved by the Committee relating to the Participant’s
Permanent Disability, death or other termination of Service, the forfeiture period (i) for a non-performance-based Restricted Stock Unit Award shall not be less than three years or (ii) for a performance-based Restricted Stock Unit Award
shall not be less than one year;
provided, further,
that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Common Stock available pursuant to Article IV may be
granted to any one or more Participants without respect to the minimum forfeiture period provision of this sentence.
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Notwithstanding the foregoing but subject to Section 2.04, the forfeiture period of a Restricted Stock Unit Award may, but need not, lapse in installments. Until the lapse or release of all
restrictions applicable to an Award of Restricted Stock Units, no shares of Common Stock shall be issued in respect of such Awards and no Participant shall have any rights as a stockholder of the Company with respect to the shares of Common Stock
covered by such Restricted Stock Unit Award. A Participant’s Restricted Stock Unit Award shall not be contingent on any payment by or consideration from the Participant other than the rendering of Services. Notwithstanding anything contained in
this Section 7.03 to the contrary, the Committee may, in its sole discretion, waive the forfeiture period and any other conditions set forth in any Award Agreement under appropriate circumstances (including the death, Permanent Disability or
Retirement of the Participant or a material change in circumstances arising after the Date of Grant) and subject to such terms and conditions (including forfeiture of a proportionate number of the Restricted Stock Units) as the Committee shall deem
appropriate. The Committee may provide in an Award Agreement, in its discretion, Dividend Equivalent Rights in connection with a Restricted Stock Unit Award;
provided, however,
that any cash or shares of Common Stock distributed as a Dividend
Equivalent Right or otherwise with respect to any Restricted Stock Units as to which the restrictions have not yet lapsed, shall be subject to the same restrictions as such Restricted Stock Units and held or restricted as provided in this
Section 7.03. For purposes of the Plan, “Dividend Equivalent Right” means a right to receive additional whole Restricted Stock Units for any dividends on the shares of Common Stock underlying a Restricted Stock Unit, as though such
underlying shares had been issued and outstanding and held by the Participant on the record date of payment of such dividends.
7.04 Change in Control.
Unless otherwise provided by the Committee in the applicable Award Agreement, in the event of a Change in Control, all restrictions applicable to Restricted Share and Restricted Stock Unit Awards shall terminate fully and the Participant shall
immediately vest in the Common Stock underlying such Awards. Unless otherwise determined by the Committee, the provisions of this Section 7.04 shall not be applicable to any Restricted Shares and Restricted Stock Units granted to a Participant
if any Change in Control results from such Participant’s beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Common Stock.
ARTICLE VIII
PERFORMANCE AWARDS
8.01 Performance Awards.
(a) Award Periods and
Determinations of Awards.
The Committee may grant Performance Awards to Participants. A Performance Award shall consist of the right to receive a payment (measured by the Fair Market Value of a specified number of shares of Common Stock,
increases in such Fair Market Value during the Award Period and/or a fixed cash amount) contingent upon the extent to which certain predetermined performance targets have been met during an Award Period. Performance Awards may be made in conjunction
with, or in addition to, Restricted Share or Restricted Stock Unit Awards made under Article VII. The Award Period shall be two or more fiscal or calendar years or other annual periods as determined by the Committee. Subject to Section 2.04, the
Committee, in its discretion and under such terms as it deems appropriate, may permit newly eligible Participants, such as those who are promoted or newly hired, to receive Performance Awards after an Award Period has commenced.
(b) Performance Targets.
The performance targets may include such goals related to the performance of the Company and/or the performance of a Participant as
may be established by the Committee in its discretion. In the case of Performance Awards intended to qualify for deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code, the targets
will consist of specified levels of one or more of the Performance Goals. The performance targets established by the Committee may vary for different Award Periods and need not be the same for each Participant receiving a Performance Award in an
Award Period. Except to the extent inconsistent with the performance-based compensation exception under Section 162(m) of the Code, in the case of Performance Awards granted to Participants to whom such section is applicable, the Committee, in
its discretion, but only under unusual and/or infrequent circumstances as determined by the Committee, may change any prior determination of performance targets for any Award Period at any time prior to the final determination of the value of a
related Performance Award when events or transactions occur to cause such performance targets to be an inappropriate measure of achievement.
(c) Earning
Performance Awards.
The Committee, on or as soon as practicable after the Date of Grant, shall determine or prescribe a formula for determining the percentage of the applicable Performance Award to be earned based upon the degree of
attainment of performance targets.
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(d) Payment of Earned Performance Awards.
Payments of earned Performance Awards shall be made in cash or
shares of Common Stock or a combination of cash and shares of Common Stock, as set forth in the Award Agreement. The Committee, in its sole discretion, may provide such terms and conditions with respect to the payment of earned Performance Awards as
it may deem desirable.
8.02 Terms of Performance Awards.
(a) Termination of Service.
Unless otherwise provided below or in Section 8.03, in the case of a Participant’s
termination of Service prior to the end of an Award Period, the Participant will not have earned any Performance Awards for that Award Period.
(b) Retirement.
If a Participant’s termination of Service is because of Retirement prior to the end of an Award Period,
the Participant will not be paid any Performance Award, unless the Award Agreement provides otherwise or the Committee, in its sole and exclusive discretion, determines that an Award should be paid and paying the Award would not cause the Award to
no longer qualify for deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code. In such a case, the Participant shall be entitled to receive a pro-rata portion of his or her Award as
determined under subsection (d).
(c) Death or Disability.
If a Participant’s termination of Service is due to
death or disability (as provided in the Award Agreement or determined in the sole and exclusive discretion of the Committee) prior to the end of an Award Period, the Participant or the Participant’s personal representative shall be entitled to
receive a pro-rata share of his or her Award as determined under subsection (d).
(d) Pro-Rata Payment.
The amount of
any payment to be made to a Participant whose termination of Service occurs by Retirement, death or disability (under the circumstances described in subsections (b) and (c) above) will be the amount determined by multiplying (i) the
amount of the Performance Award that would have been earned through the end of the Award Period had such Service not been terminated by (ii) a fraction, the numerator of which is the number of whole months such Participant was employed during
the Award Period, and the denominator of which is the total number of months of the Award Period. Any such payment made to a Participant whose Service is terminated prior to the end of an Award Period shall be made at the end of such Award Period,
unless otherwise determined by the Committee in its sole discretion. Any partial payment previously made or credited to a deferred account for the benefit of a Participant in accordance with Section 8.01(d) of the Plan shall be subtracted from
the amount otherwise determined as payable as provided in this Section 8.02(d).
(e) Other Events.
Notwithstanding
anything to the contrary in this Article VIII, the Committee may, in its sole and exclusive discretion, determine to pay all or any portion of a Performance Award to a Participant who has terminated Service prior to the end of an Award Period under
certain circumstances (including the death, disability or Retirement of the Participant or a material change in circumstances arising after the Date of Grant), subject to such terms and conditions as the Committee shall deem appropriate, unless
paying the Award would cause the Award to no longer qualify for deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code.
(f) Stockholder Rights.
If specified by the Committee in the Award Agreement, the recipient of an Award under this Article
VIII shall be entitled to receive, currently or on a deferred basis dividends or Dividend Equivalent Rights with respect to the Common Stock or other securities covered by the Performance Award;
provided, however,
that any cash or shares of
Common Stock distributed as a dividend or otherwise with respect to any Performance Award as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Performance Award and held or restricted as provided in this
Article VIII. Unless specified by the Committee in the Award Agreement, the recipient of an Award under this Article VIII shall not become a stockholder of the Company with respect to shares subject to the Award Agreement and shall not have the
right to vote such shares.
8.03 Change in Control.
Unless otherwise provided by the Committee in the applicable Award Agreement, in the event of a
Change in Control, all Performance Awards for all Award Periods shall immediately become fully payable (at the maximum level) to all Participants and shall be paid to Participants within thirty (30) days after such Change in Control. Unless
otherwise determined by the Committee, the provisions of this Section 8.03 shall not be applicable to any Performance Awards granted to a Participant if any Change in Control results from such Participant’s beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of Common Stock.
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ARTICLE IX
OTHER STOCK-BASED AWARDS
9.01 Grant of Other
Stock-Based Awards.
Other stock-based awards, consisting of stock purchase rights, Awards of Common Stock, or Awards valued in whole or in part by reference to, or otherwise based on, Common Stock, may be granted either alone or in addition
to or in conjunction with other Awards under the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be made, the number
of shares of Common Stock to be granted pursuant to such Awards, and all other conditions of the Awards. Any such Award shall be confirmed by an Award Agreement executed by the Company and the Participant, which Award Agreement shall contain such
provisions as the Committee determines to be necessary or appropriate to carry out the intent of this Plan with respect to such Award.
9.02 Terms of Other
Stock-Based Awards.
In addition to the terms and conditions specified in the Award Agreement, Awards made pursuant to this Article IX shall be subject to the following:
(a) Non-Transferability.
Any Common Stock subject to Awards made under this Article IX may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
(b) Interest and Dividends.
If specified by the Committee in the Award Agreement, the recipient of an Award under this
Article IX shall be entitled to receive, currently or on a deferred basis, interest or dividends or Dividend Equivalent Rights with respect to the Common Stock or other securities covered by the Award; provided, however, that any cash or shares of
Common Stock distributed as dividends or Dividend Equivalent Rights or otherwise with respect to any Award as to which the restrictions have not yet lapsed, shall be subject to the same restrictions as the underlying Award.
(c) Termination of Service.
The Award Agreement with respect to any Award shall contain provisions dealing with the
disposition of such Award in the event of a termination of Service prior to the exercise, realization or payment of such Award, whether such termination occurs because of Retirement, Permanent Disability, death or other reason, with such provisions
to take account of the specific nature and purpose of the Award.
(d) Performance-Based Awards.
With respect to Awards
under this Article IX intended to qualify for deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code, performance targets will consist of specified levels of one or more of the
Performance Goals.
(e) Vesting or Forfeiture of Other Stock-Based Awards.
For Awards granted to Participants under this
Article IX after the Effective Date, and subject to the provisions of Section 9.03, the provisions of any applicable retirement, severance or employment agreement and such terms as may be approved by the Committee relating to the
Participant’s Permanent Disability, death or other termination of Service, the vesting schedule or forfeiture period (i) for a non-performance-based Award shall not be less than three years or (ii) for a performance-based Award shall
not be less than one year;
provided, further,
that, notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to five percent (5%) of the shares of Common Stock available pursuant to Article IV may be
granted to any one or more Participants without respect to the minimum vesting schedule or forfeiture period provision of this sentence. Notwithstanding the foregoing but subject to Section 2.04, the vesting schedule or forfeiture period of an Award
may, but need not, lapse in installments.
9.03 Change in Control.
Unless otherwise provided by the Committee in the applicable Award Agreement, in the
event of a Change in Control, all Awards under this Article IX shall immediately become fully vested and payable to all Participants upon such Change in Control. Unless otherwise determined by the Committee, the provisions of this Section 9.03
shall not be applicable to any Awards granted to a Participant if any Change in Control results from such Participant’s beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Common Stock.
ARTICLE X
SHORT-TERM CASH INCENTIVE
AWARDS
10.01 Eligibility.
This Article X is a limited purpose provision that shall apply only in the event the Committee deems it appropriate
that the Company’s short-term cash incentives for executive officers of the Company who are from time to time determined by the Committee to be “covered employees” for purposes of Section 162(m) of the Code qualify for
deductibility under the “performance-based” compensation exception contained in Section 162(m) of the Code.
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10.02 Awards.
(a) Performance Targets.
For each fiscal or calendar year of the Company, the Committee shall establish objective
performance targets based on specified levels of one or more of the Performance Goals. Such performance targets shall be established by the Committee on a timely basis to ensure that the targets are considered “pre-established” for
purposes of Section 162(m) of the Code.
(b) Amounts of Awards.
In conjunction with the establishment of
performance targets for a fiscal year, the Committee shall adopt an objective formula (on the basis of percentages of Participants’ salaries, shares in a bonus pool or otherwise) for computing the respective amounts payable under the Plan to
Participants if and to the extent that the performance targets are attained. Such formula shall comply with the requirements applicable to performance-based compensation plans under Section 162(m) of the Code and, to the extent based on
percentages of a bonus pool, such percentages shall not exceed 100% in the aggregate.
(c) Payment of Awards.
Awards
will be payable to Participants in cash each year upon prior written certification by the Committee of attainment of the specified performance targets for the preceding fiscal or calendar year.
(d) Negative Discretion.
Notwithstanding the attainment by the Company of the specified performance targets, the Committee
shall have the discretion, which need not be exercised uniformly among the Participants, to reduce or eliminate the Short-Term Cash Incentive Awards that would be otherwise paid.
(e) Maximum Awards.
The maximum aggregate dollar amount that may be paid with respect to Short-Term Cash Incentive Awards
during any one calendar year to any one Participant under this Plan shall be $5,000,000.
(f) Guidelines.
The Committee
may adopt from time to time written policies for its implementation of this Article X. Such guidelines shall reflect the intention of the Company that all payments hereunder qualify as performance-based compensation under Section 162(m) of the
Code.
10.03 Non-Exclusive Arrangement.
The adoption and operation of this Article X shall not preclude the Board or the Committee from approving other
short-term incentive compensation arrangements for the benefit of individuals who are Participants hereunder as the Board or Committee, as the case may be, deems appropriate and in the best interests of the Company.
ARTICLE XI
TERMS APPLICABLE TO ALL AWARDS
GRANTED UNDER THE PLAN
11.01 Plan Provisions Control Award Terms; Successors.
The terms of the Plan shall govern all Awards granted under the
Plan, and in no event shall the Committee have the power to grant any Award under the Plan the terms of which are contrary to any of the provisions of the Plan. In the event any provision of any Award Agreement granted under the Plan shall conflict
with any term in the Plan as constituted on the Date of Grant of such Award, the term in the Plan as constituted on the Date of Grant of such Award shall control. All obligations of the Company under the Plan with respect to Awards granted hereunder
shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
11.02 Award Agreement.
No person shall have any rights under any Award granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award Agreement or the Participant shall have received and acknowledged notice of the Award authorized by the Committee expressly granting the Award to such person and
containing provisions setting forth the terms of the Award.
11.03 Modification of Award After Grant.
No Award granted under the Plan to a Participant
may be modified (unless such modification does not materially decrease the value of that Award) after its Date of Grant except by express written agreement between the Company and such Participant;
provided
that any such change (a) may
not be inconsistent with the terms of the Plan and (b) shall be approved by the Committee.
11.04 Limitation on Transfer.
Except as provided in
Section 7.01(c) in the case of Restricted Shares, a Participant’s rights and interest under the Plan may not be assigned or transferred other than by will or the laws of descent and distribution and, during the lifetime of a Participant,
only the Participant personally (or the Participant’s personal representative) may exercise rights under the Plan. The Participant’s Beneficiary may exercise the Participant’s rights to
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the extent they are exercisable under the Plan following the death of the Participant. Notwithstanding the foregoing, the Committee may grant Non-Qualified Stock Options that are transferable,
without payment of consideration, to immediate family members of the Participant, to trusts or partnerships for such family members, or to such other parties as the Committee may approve (as evidenced by the applicable Award Agreement or an
amendment thereto), and the Committee may also amend outstanding Non-Qualified Stock Options to provide for such transferability.
11.05 Withholding Taxes.
The Company shall be entitled, if the Committee deems it necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax required by law to be withheld or paid by
the Company with respect to any amount payable and/or shares of Common Stock issuable under such Participant’s Award or with respect to any income recognized upon a disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment of cash or issuance of such shares upon exercise or vesting of an Award unless indemnified to its satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall be payable by the Participant at such time as the Committee determines. The Participant may elect to meet his or her withholding requirement (i) by having withheld from
such Award at the appropriate time that number of shares of Common Stock the Fair Market Value of which is equal to the amount of withholding taxes due), (ii) by direct payment to the Company in cash of the amount of any taxes required to be
withheld with respect to such Award or (iii) by a combination of withholding such shares and paying cash.
11.06 Surrender of Awards.
Any Award
granted under the Plan may be surrendered to the Company for cancellation on such terms as the Committee and the Participant approve.
11.07 Cancellation and
Rescission of Awards.
(a) Detrimental Activities.
Unless the Award Agreement specifies otherwise, the Committee
may cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid, or deferred Awards, whether vested or unvested, at any time if the Participant is not in compliance with all applicable provisions of the Award Agreement
and the Plan, or if the Participant engages in any “Detrimental Activity.” For purposes of this Section 11.07, “Detrimental Activity” shall include: (i) the rendering of services for any organization or engaging
directly or indirectly in any business which is or becomes competitive with the Company or its Subsidiaries, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or
in conflict with the interests of the Company or its Subsidiaries, either during Service or within twelve (12) months after termination of Service; (ii) the disclosure to anyone outside the Company, or the use in other than the
Company’s business, without prior written authorization from the Company, of any confidential information or material relating to the business of the Company, acquired by the Participant either during or after Service with the Company;
(iii) any attempt directly or indirectly to induce any employee of the Company to be employed or perform services elsewhere or any attempt directly or indirectly to solicit the trade or business of any current or prospective customer, supplier
or partner of the Company or its Subsidiaries; or (iv) any other conduct or act the Committee determines to be injurious, detrimental or prejudicial to any interest of the Company or its Subsidiaries.
(b) Enforcement.
Upon exercise, payment, or delivery pursuant to an Award, the Participant shall certify in a manner
acceptable to the Company that he or she is in compliance with the terms and conditions of the Plan. In the event a Participant fails to comply with the provisions of paragraphs (a)(i)-(iv) of this Section 11.07, if applicable, prior to,
or during the six months after, any exercise, payment or delivery pursuant to an Award, such exercise, payment or delivery may be rescinded within two years thereafter. In the event of any such rescission, the Participant shall pay to the Company
the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery, in such manner and on such terms and conditions as may be required, and the Company shall be entitled to set-off against the amount of
any such gain any amount owed to the Participant by the Company.
(c) Erroneously Awarded Compensation
. All Awards under
the Plan shall be subject to any compensation recovery policy adopted by the Company to comply with applicable law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or to comport with good corporate
governances practices, as such policy may be amended from time to time.
(d) Cancellation in the Event of Change in
Control
. In the event of a Change in Control that is a merger or consolidation in which Company is not the surviving corporation or that results in the acquisition of substantially all the Company’s outstanding Common Stock by a single
Person or entity or by a group of Persons or entities acting in concert, or in the event of a sale or transfer of all or substantially all of Company’s assets (a “Covered Transaction”),
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the Committee shall have the discretion to provide for the termination of all outstanding Options and Stock Appreciation Rights as of the effective date of the Covered Transaction; provided,
that, if the Covered Transaction follows a Change in Control or would give rise to a Change in Control, no Option or Stock Appreciation Right will be so terminated (without the Participant’s consent) prior to the expiration of thirty
(30) days following the later of (i) the date on which the Award became fully exercisable and (ii) the date on which Participant received written notice of the Covered Transaction. For purposes of the Plan, “Person” shall
have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used herein; however, a Person shall not include (i) the Company or any of its Subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of the stock of the Company.
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11.08
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Adjustments to Reflect Capital Changes.
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(a) Recapitalization.
The number and kind of shares of Common Stock subject to outstanding Awards, the Exercise Price for such shares, the number and kind of shares available for Awards subsequently granted under the Plan, the maximum number of shares in respect
of which Awards can be made to any Participant in any calendar year and the Performance Goals and Award Periods applicable to outstanding Awards shall be appropriately adjusted to reflect any stock dividend, stock split, or share combination or any
recapitalization, merger, consolidation, exchange of shares, liquidation or dissolution of the Company or other change in capitalization with a similar substantive effect upon the Plan or the Awards granted under the Plan. The Committee shall have
the power and sole discretion to determine the amount of the adjustment to be made in each case.
(b) Certain Mergers.
After any Merger in which the Company is not the surviving corporation or pursuant to which a majority of the shares which are of the same class as the shares of Common Stock that are subject to outstanding Options are exchanged for, or
converted into, or otherwise become shares of another corporation, the surviving, continuing, successor or purchasing corporation, as the case may be (the “Acquiring Corporation”), will either assume the Company’s rights and
obligations under outstanding Award Agreements or substitute awards in respect of the Acquiring Corporation’s stock for outstanding Awards;
provided, however
, that if the Acquiring Corporation does not assume or substitute awards for
such outstanding Awards, the Board shall provide prior to the Merger that any unexercisable and/or unvested portion of the outstanding Awards shall be immediately exercisable and vested, and all time-based, performance-based or other restrictions on
such Awards shall lapse, as of a date prior to such Merger, as the Board so determines. The exercise and/or vesting of any Award that was permissible or caused solely by reason of this Section 11.08 shall be conditioned upon the consummation of
the Merger. Comparable rights shall accrue to each Participant in the event of successive Mergers of the character described above.
(c) Options to Purchase Shares or Stock of Acquired Companies.
After any Merger in which the Company or a Subsidiary shall
be a surviving corporation, the Committee may grant Options or other Awards under the provisions of the Plan, pursuant to Section 424 of the Code or as is otherwise permitted under the Code, in full or partial replacement of or substitution for
old stock options granted under a plan of another party to the merger whose shares of stock subject to the old options may no longer be issued following the Merger. The manner of application of the foregoing provisions to such options and any
appropriate adjustments in the terms of such stock options shall be determined by the Committee in its sole discretion. Any such adjustments may provide for the elimination of any fractional shares that might otherwise become subject to any Options.
The foregoing shall not be deemed to preclude the Company from assuming or substituting for stock options of acquired companies other than pursuant to this Plan.
11.09 Legal Compliance.
Shares of Common Stock shall not be issued hereunder unless the issuance and delivery of such shares shall comply with applicable
laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. Notwithstanding any provision of this Plan or any applicable Award Agreement to the contrary, the Committee shall have the sole discretion
to impose such conditions, restrictions and limitations (including suspending exercises of Options or Stock Appreciation Rights and the tolling of any applicable exercise period during such suspension) on the issuance of shares with respect to any
Award unless and until the Committee determines that such issuance complies with (i) any applicable securities registration requirements or the Committee has determined that an exemption therefrom is available, (ii) any applicable listing
requirement of any stock exchange on which the Common Stock is listed, and (iii) any other applicable provision of law, including foreign securities laws where applicable.
11.10 No Right to Employment or Awards.
No Participant or other person shall have any claim of right to be granted an Award under the Plan. Neither the Plan
nor any action taken hereunder shall be construed as giving any Participant
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any right to be retained in the Service of the Company or any of its Subsidiaries. No Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants.
11.11 Awards Not Includable for Benefit Purposes.
Payments received by a Participant pursuant to the
provisions of the Plan shall not be included in the determination of benefits under any pension, group insurance or other benefit plan applicable to the Participant which is maintained by the Company or any of its Subsidiaries, except as may be
provided under the terms of such plans or determined by the Board.
11.12 Governing Law.
All determinations made and actions taken pursuant to the Plan
shall be governed by the laws of the State of Delaware, other than the conflict of laws provisions thereof, and construed in accordance therewith. The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or
otherwise relating to), the Plan will be exclusively in the courts in the Commonwealth of Pennsylvania, County of Allegheny, including the Federal Courts located therein (should Federal jurisdiction exist).
11.13 No Strict Construction.
No rule of strict construction shall be implied against the Company, the Committee or any other person in the interpretation
of any of the terms of the Plan, any Award granted under the Plan or any rule or procedure established by the Committee.
11.14 Captions.
The captions
(
i.e.,
all Section headings) used in the Plan are for convenience only, do not constitute a part of the Plan, and shall not be deemed to limit, characterize or affect in any way any provisions of the Plan, and all provisions of the Plan shall
be construed as if no captions had been used in the Plan.
11.15 Severability.
Whenever possible, each provision in the Plan and every Award at any time
granted under the Plan shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Plan or any Award at any time granted under the Plan shall be held to be prohibited by or invalid under
applicable law, then (a) such provision shall be deemed amended to accomplish the objectives of the provision as originally written to the fullest extent permitted by law and (b) all other provisions of the Plan, such Award and every other
Award at any time granted under the Plan shall remain in full force and effect.
11.16 Amendment and Termination.
(a) Amendment.
The Board shall have complete power and authority to amend the Plan at any time
; provided
that no
termination or amendment of the Plan may, without the consent of the Participant to whom any Award shall theretofore have been granted under the Plan, materially adversely affect the right of such individual under such Award
; and provided
further,
that the Board shall not, without approval by the stockholders of the Company, make any amendment which requires stockholder approval under the Code or under any other applicable law or rule of any stock exchange on which the Common
Stock is listed. Notwithstanding any other provision of this Plan, except in connection with adjustments to reflect changes in capitalization in accordance with Section 11.08, the terms of outstanding Options and Stock Appreciation Rights may
not be amended or modified, without approval by the stockholders of the Company, to reduce the Exercise Price, to cancel the Option or Stock Appreciation Rights when the Exercise Price exceeds the Fair Market Value of the underlying Common Stock in
exchange for another Award, or in any other circumstance meeting the definition of a “repricing” under the rules of the New York Stock Exchange (or any similar rule of a stock exchange on which the Common Stock is then listed).
(b) Termination.
The Board shall have the right and the power to terminate the Plan at any time. No Award shall be granted
under the Plan after the termination of the Plan, but the termination of the Plan shall not have any other effect and any Award outstanding at the time of the termination of the Plan may be exercised after termination of the Plan at any time prior
to the expiration date of such Award to the same extent such Award would have been exercisable had the Plan not been terminated.
11.17 Employees Based Outside
of the United States.
Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or directors, the Committee, in its sole
discretion, shall have the power and authority to:
(a)
Determine which Subsidiaries shall be covered by the Plan;
(b)
Determine which employees or directors outside the United States are eligible to participate in the Plan;
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(c)
Modify the terms and conditions of any Award granted to employees or
directors outside the United States to comply with applicable foreign laws;
(d)
Establish subplans and modify exercise
procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 11.17 by the Committee shall be attached to this
Plan document as appendices; and
(e)
Take any action, before or after an Award is made, that it deems advisable to
obtain approval or comply with any necessary local government regulatory exemptions or approvals.
Notwithstanding the above, (i) the duly authorized officer of
the Company may take the actions under Section 11.17(c) and (e) above, (ii) neither the Committee nor such officers may take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any
securities law, or governing statute or any other applicable law.
11.18 Deferred Compensation.
No Award shall provide for a deferral of compensation
under Section 409A of the Code unless the Committee specifically provides that the Award is intended to be subject to Section 409A of the Code and the Committee shall interpret this Plan in a manner consistent with an Award’s
designation as either subject to or exempt from Section 409A, as applicable. References in this Plan to “termination of Service” and similar terms shall mean a “separation from service” within the meaning of that term under
Section 409A of the Code. Any payment or distribution that is to be made to a Participant who is a “specified employee” of the Company within the meaning of that term under Section 409A of the Code and as determined by the
Committee, on account of a “separation from service” under Section 409A of the Code, may not be made before the date which is six months after the date of such “separation from service,” unless the payment or distribution is
exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. The Company cannot guarantee that the Awards, payments, and benefits that may be made or provided under the Plan will satisfy
all applicable provisions of Section 409A of the Code.
11.19 Leaves of Absence.
Unless the Committee provides otherwise and except where
prohibited by law, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence, but such leave of absence (if approved by the Company) shall not be deemed a termination of Service or Service for purposes of the Plan. For
purposes of Incentive Stock Options, no such leave may exceed ninety (90) days unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company
is not so guaranteed, then three (3) months following the 91st day of such leave any Incentive Stock Option held by the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax purposes as a Non-Qualified
Stock Option.
11.20 Electronic Delivery of Plan Information and Electronic Signatures.
To the extent permitted by applicable law, the Company may
deliver by email or other electronic means (including posting on a web site maintained by the Company or by a third party under contract with the Company) all documents relating to the Plan or any Award thereunder (including without limitation,
prospectuses required by applicable securities law) and all other documents that the Company is required to deliver to its security holders (including without limitation, annual reports and proxy statements). To the extent permitted by applicable
law, the Participant’s execution of an Award Agreement may be made by electronic facsimile or other method of recording of the Participant’s signature in a manner that is acceptable to the Committee.
11.21 Unfunded Status of Awards
. The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments
not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company;
provided, however
, that the Committee
may authorize the creation of trusts or make other arrangements to meet the Company’s obligations under the Plan to deliver cash, shares of Common Stock, other Awards, or other property pursuant to any Award, which trusts or other arrangements
shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines with the consent of each affected Participant.
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11.22
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Interpretive Provisions
. Unless the context clearly requires otherwise:
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(a)
The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined, whenever the
context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms, the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without
limitation”, and the word “will” shall be construed to have the same meaning and effect as the word “shall”.
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WESCO International, Inc. - 2017 Proxy Statement
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(b)
Any definition of or reference to any agreement, instrument or other
document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth
herein).
(c)
Any reference herein to any person or entity shall be construed to include the permitted successors and
assigns of such person or entity.
(d)
The words “herein”, “hereof” and “hereunder”, and
words of similar import when used in this Plan or Award Agreement shall be construed to refer to the Plan or Award Agreement, as applicable, in its entirety, and not to any particular provision thereof.
(e)
All references to Sections shall be construed to refer to Sections of this Plan.
(f)
Any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified, or supplemented from time to time.
(g)
In the computation of periods of time from a specified date to a later specified date, the word “from” means
“from and including;” the words “ to” and “until” each mean “to but excluding;” and the word “through” means “to and including”.
11.23 Nonexclusivity of the Plan
. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.
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A-18 |
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WESCO International, Inc. - 2017 Proxy Statement
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WESCO INTERNATIONAL, INC.
Suite 700
225 West Station Square Drive
Pittsburgh, PA 15219-1122
Phone: 412-454-2200
www.wesco.com
WESCO INTERNATIONAL, INC.
225 WEST STATION SQ. DR.
SUITE 700
PITTSBURGH, PA 15219
ATTN: SAMANTHA L. O’DONOGHUE
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M., Eastern Time, Tuesday, May 30, 2017. Have
your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce
the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail
or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M., Eastern Time, Tuesday, May 30, 2017. Have your proxy card in hand when you
call and then follow the instructions.
VOTE BY MAIL
Mark, sign and
date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS:
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY