BUILDERS FIRSTSOURCE
DEFERRED COMPENSATION PLAN
Effective April 1, 2023
PREAMBLE
The Plan is intended to be a “plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended, or an “excess benefit plan” within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974, as amended, or a combination of both. The Plan is intended to provide nonqualified deferred compensation and is intended to conform with the requirements of Internal Revenue Code Section 409A and the final regulations issued thereunder and shall be interpreted, implemented and administered in a manner consistent therewith.
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Pronouns used in the Plan are in the masculine gender but include the feminine gender unless the context clearly indicates otherwise. Singular and plural forms may also be used interchangeably unless the context also clearly indicates otherwise. Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context:
“Account” means one or more of a Participant’s Directed Investment Accounts or, in the case of a Director, his or her Stock Unit Account, as the context requires.
“Base Compensation” means the portion of an Eligible Employee’s Compensation derived from the Participant’s base rate of compensation (for example regular compensation, holiday, vacation, personal and sick pay) and other amounts of Compensation that are not Bonus Compensation. In all cases, Base Compensation refers to amounts before reductions for contributions under this Plan and any other deferred compensation plan sponsored by the Company.
“Beneficiary” means the persons, trusts, estates or other entities entitled under Section 7.2 to receive benefits under the Plan upon the death of a Participant.
“Board” or “Board of Directors” means the Board of Directors of the Company.
“Bonus Compensation” means the portion of an Eligible Employee’s Compensation derived from regular incentive programs sponsored by the Company, including the corporate annual bonus and the field management bonus (but excluding spot bonuses, ad hoc bonuses, and other discretionary and non-discretionary bonuses that are not part of a regular incentive program). Bonus Compensation for a Plan Year shall refer to amounts earned with respect to such Plan Year, even if paid after the end of the Plan Year.
“Change in Control” means a “change in the ownership,” “change in effective control,” or “change in the ownership of a substantial portion of the assets,” as determined in accordance with the applicable regulations under Code Section 409A.
“Code” means the Internal Revenue Code of 1986, as amended.
“Committee” means the Committee designated by the Board of Directors to administer the Plan, as described in Section 11.1.
“Common Stock” means the common stock, par value $.01 per share, of the Company.
“Company” means Builders FirstSource, Inc.
“Company Credits” means the amount of any credits contributed by the Company under Section 5.3, together with any earnings thereon.
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“Compensation” for a Director shall be Director Cash Compensation and Director Stock Compensation. For an Eligible Employee, Compensation shall mean the total amounts paid to the Eligible Employee during the applicable calendar year for services. Compensation shall be determined by excluding reimbursements or other expense allowances, fringe benefits (cash and non-cash), moving expenses, and welfare benefits. For this purpose, workers’ compensation payments of any type and severance pay of any type shall be considered “welfare benefits” and are excluded from the definition of Compensation however holiday, vacation, personal and sick pay, and short term disability are not considered “welfare benefits” for this purpose and are included in the definition of Compensation. In addition, Compensation shall exclude all of the following:
(1) Company contributions to a plan of deferred compensation which are not includible in the employee’s gross income for the taxable year in which contributed, or employer contributions under a simplified employee pension plan, or any distributions from a plan of deferred compensation;
(2) Amounts realized from the exercise of a stock option, or when restricted stock (or property) held by the employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified or nonqualified stock option;
(4) Amounts earned or received under a long term incentive program sponsored by the Company;
(5) Any amounts (other than Director Cash Compensation and Director Stock Compensation) not paid through United States payroll; and
(6) Other amounts determined from time to time by the Committee to be excluded from Compensation or ineligible for deferral.
“Deferred Stock Unit” means a unit credited to a Director’s Deferred Stock Unit Account representing the right to receive a share of Common Stock pursuant to the terms of the Plan
“Deferred Stock Unit Account” means a bookkeeping account established and maintained on behalf of a Director which is denominated in Deferred Stock Units pursuant to Article 5 of the Plan
“Directed Investment Account” means an account established for the purpose of recording amounts credited on behalf of a Participant and any income, expenses, gains, losses or distributions included thereon. The Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant or to the Participant’s Beneficiary pursuant to the Plan. The Account may contain separate subaccounts for Participant Deferrals, Company Credits, and other subaccounts as determined by the Committee.
“Director” means a non-employee member of the Board.
“Director Cash Compensation” means the total annual retainer, committee chairperson and committee member retainers, retainer for serving as chairperson of the Board and any other fees (but not reimbursement of expenses that would be payable to a Director in cash during a Plan Year absent a deferral election pursuant to Section 4.1.
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“Director Stock Compensation” means the annual equity award that would be granted to a Director in the form of Restricted Stock Units during a Plan Year absent a deferral election pursuant to Section 4.1.
“Disability” means that the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Participant’s Employer. For purposes of this Plan, a Participant shall be Disabled if (a) determined to be totally disabled by the Social Security Administration, or (b) determined to be disabled in accordance with the applicable disability insurance program of the Company (for an employee) or the plan of the Participant’s employer, if any (for a Director), provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this paragraph.
“Effective Date” means April 1, 2023.
“Election Period” means the period established by the Committee during which Participant deferral and distribution elections must be made in accordance with the requirements of Code Section 409A. Unless otherwise specified by the Committee, the Election Period shall be the month of December, provided however that the Election Period shall in no event end later than the last day of the Plan Year immediately preceding the Plan Year in which Compensation with regard to which a deferral is made is earned. Elections shall only be permissible if made during the Election Period.
Notwithstanding the foregoing, in the case of an employee who first becomes an Eligible Employee or Director after the start of the Plan Year (who for clarification has not previously been eligible to defer compensation into this or any and any other plan of the Company that would be aggregated with this Plan for purposes of Section 409A of the Code), the Committee shall provide an initial election period of not more than 30 days from the date an Eligible Employee or Director first becomes eligible. This initial election period shall also be treated as an Election Period for purposes of the Plan with regard to affected Eligible Employees or Director, provided that such Eligible Employees or Directors shall only be eligible to defer Compensation earned after their elections have become irrevocable.
Notwithstanding the foregoing and subject to the limitations described below, the Committee may determine that an irrevocable deferral election for Bonus Compensation that constitutes “performance-based compensation” under applicable law may be made by submitting a deferral election regarding such Bonus Compensation on or before the deadline established by the Committee, which in no event shall be later than 6 months before the end of the applicable, provided however that any such election shall be submitted in a manner compliant with Code Section 409A and before such time as the Bonus Compensation has become readily ascertainable.
“Eligible Employee” means a member of the management team and other select employees of the Company with a position of vice president or above selected by the Committee. Notwithstanding the foregoing, the Committee shall have the discretion to designate individuals outside of this designated group provided that the Committee determines that such individuals are part of a select group of management or highly compensated employees.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“Participant” means an Eligible Employee or Director who commences participation in the Plan in accordance with Article 3.
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“Participant Deferrals” means the amount of any deferrals of Base Compensation or Bonus Compensation, together with any earnings thereon, in the case of an Eligible Employee, or the amount of any deferrals of Director Cash Compensation and Director Stock Compensation, in the case of a Director.
“Plan” means the Builders FirstSource Deferred Compensation Plan, as set forth herein and as amended from time to time.
“Plan Year” means the period commencing January 1 and ending on December 31, provided however that the initial Plan Year shall be a short plan year commencing on the Effective Date and ending on December 31, 2023.
“Restricted Stock Unit” means a right to receive one share of Common Stock upon satisfaction of a vesting requirement.
“Separation from Service” means the date that the Participant resigns, retires or otherwise has a voluntary or involuntary termination of employment (for an employee) or of service on the Board (for a Director) with respect to the Company and any entity that is a member of the Company’s controlled group of corporations provided however that such termination of employment (or end of service as a Director) must also constitute a “separation from service” under Code Section 409A and all applicable rules and regulations issued thereunder.
For each Plan Year, a Director may elect during the applicable Election Period, by executing in writing or electronically a deferral agreement on form(s) approved by the Committee, (i) to defer the receipt of a designated percentage of his or her Director Cash Compensation, and to direct that such Director Cash Compensation be credited to the Director’s Directed Investment Account, (ii) to defer the receipt of a designated percentage of his or her Director Cash Compensation in the form of Deferred Stock Units credited to the Director’s Deferred Stock Unit Account, and/or (iii) to elect to defer the receipt of his or Director Stock Compensation in the form of Deferred Stock Units credited to the Director’s Deferred Stock Unit Account (which shall be credited to the Director’s Deferred Stock Unit Account pursuant to Section 5.5 following satisfaction of any applicable vesting conditions).
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A new deferral election must be timely executed and delivered to the Committee for each Plan Year during which the Eligible Employee or Director desires to defer Compensation. Except as provided in Section 8.5, elections shall become irrevocable for a Plan Year at the end of the Election Period immediately preceding that Plan Year.
A deferral election for a Plan Year shall also include an election of time and form of payment from the list set forth in Article 8.
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5.6 Company Credits. The Company may, but shall not be required to, make credits to the Plan for one or more eligible Participants. The amount of such Company Credits and any formula for determining such credits (as well as other features such as vesting conditions) shall be determined and set forth at the time the Company makes the credits. The Company need not treat all Participants equally in determining whether to make a Company Credit.
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A copy of the death notice or other sufficient documentation must be filed with and approved by the Committee or its designee. If upon the death of the Participant there is, in the opinion of the Committee, no designated Beneficiary for part or all of the Participant’s vested Account, such amount will be paid to the Participant’s estate (such estate shall be deemed to be the Beneficiary for purposes of the Plan) in accordance with the provisions of Article 8.
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Distribution of Participant Deferrals shall commence as soon as practicable on or following the earliest to occur of the following Distribution Dates:
A Participant may elect a different Distribution Date under Option (ii) for each Election Period with respect to Compensation to be deferred during the Plan Year to which the Election Period applies. If a Participant does not submit an election, the Participant shall be deemed not to have elected to receive a distribution under Option (ii).
Distribution of Company Credits shall commence as soon as practicable on or following the earliest to occur of the following Distribution Dates:
At the time of a Participant’s first deferral election under the Plan, the Participant may elect to have all Accounts be paid out in a lump sum upon the occurrence of a Change in Control. If elected, this election shall apply if the Change in Control occurs prior to the Participant’s Separation from Service and any other elected payment event. The election shall apply to both Participant Deferrals and Company Credits for all Plan Years and cannot be changed or revoked. If a Participant fails to elect a Change in Control distribution at the time of the Participant’s first election under the Plan, the Participant shall be irrevocably deemed not to have elected a Change in Control distribution event.
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A Participant may elect a different form of payment each Election Period with respect to Compensation to be deferred during the following Plan Year . If a Participant fails to elect a form of payment for any Plan Year, the Participant shall be deemed to have elected to receive a single lump sum with regard to Compensation deferred in that Plan Year. Company Credits shall be paid in a lump sum unless otherwise specified by the Company at the time it determines to make Company Credits.
(i) The election to change the time or form of payment must be submitted in writing no later than 12 months preceding the event that would otherwise have triggered the payment;
(ii) The election to change the time or form of payment shall not be effective until 12 months after it is delivered to the Committee; and
(iii) The commencement of benefits must delayed until at least five years from the date such payment would have otherwise commenced.
The Committee may impose additional restrictions on the right of Participants to change the time or form of payment provided such restrictions are at least as restrictive as the foregoing and are otherwise compliant with the requirements of Code Section 409A.
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(a) All amounts payable under this Plan shall be subject to all applicable withholdings, and the Company may withhold such amounts from any payments due the Participant or from amounts deferred, as permitted by law, or otherwise make appropriate arrangements with the Participant or his or her Beneficiary for satisfaction of such obligation. Tax, for purposes of this Section 12.8 means any federal, state, local or any other governmental income tax, employment or payroll tax, excise tax, or any other tax or assessment owing with respect to amounts deferred, any earnings thereon, and any payments made to Participants under the Plan. The Committee may condition receipt of any benefits upon the Participant’s (or Beneficiary’s) satisfaction of applicable tax and withholding obligations.
(b) Notwithstanding anything else in this Plan, and regardless of any action the Company takes with respect to any or taxes, the ultimate liability for all taxes due by a participant is and remains the Participant's responsibility, and the Company and the Committee: (i) make no representations or undertakings regarding the treatment of any taxes; and (ii) do not commit to structure the terms of the payment under the Plan to optimize, reduce, or eliminate the Participant's or Beneficiary’s liability for taxes. Without limiting the foregoing, the Company and the Committee make no guarantee with regard to any tax treatment of any benefit or payment under this Plan, and the Participant or Beneficiary shall be solely and exclusively responsible for any taxes, penalties, and interest owing with regard to participation under this Plan. Without limiting the foregoing, neither the Company nor the Committee nor any other person shall have any liability to any Participant or Beneficiary should any provision of the Plan fail to satisfy the requirements of Code Section 409A.
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The foregoing is hereby acknowledged as being the Builders FirstSource Deferred Compensation Plan as adopted by the Board on February 16, 2023, but effective April 1, 2023, except as otherwise expressly provided herein.
BUILDERS FIRSTSOURCE, INC.
/s/ Timothy D. Johnson
By: Timothy D. Johnson
Its: Executive Vice President, General Counsel
and Corporate Secretary
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