TIMKENSTEEL CORPORATION
Performance-Based Restricted Share Unit Agreement
WHEREAS, __________________ (“Grantee”) is an employee of TimkenSteel Corporation (the “Company”) or a Subsidiary thereof; and
WHEREAS, the grant of performance-based Restricted Share Units evidenced hereby was authorized by a resolution of the Compensation Committee (the “Committee”) of the Board and the execution of a performance-based Restricted Share Unit agreement in the form hereof (this “Agreement”) was authorized by a resolution of the Committee.
NOW, THEREFORE, pursuant to the TimkenSteel Corporation Amended and Restated 2020 Equity and Incentive Compensation Plan (the “Plan”) and subject to the terms and conditions thereof and the terms and conditions hereinafter set forth, the Company hereby confirms to Grantee the grant, effective _____, 2023 (the “Date of Grant”), of _____ performance-based Restricted Share Units (the “PRSUs”). All terms used in this Agreement with initial capital letters that are defined in the Plan and not otherwise defined herein will have the meanings assigned to them in the Plan. Subject to the attainment of the Management Objectives described in Section 3 and Exhibit A of this Agreement, Grantee may earn from 0% to 200% of the PRSUs.
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Nothing in this Agreement prevents Grantee from providing, without prior notice to the Company, information to governmental authorities regarding possible legal violations or otherwise testifying or participating in any investigation or proceeding by any governmental authorities regarding possible legal violations, and for purpose of clarity, Grantee is not prohibited from providing information voluntarily to the Securities and Exchange Commission pursuant to Section 21F of the Exchange Act.
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[SIGNATURES ON FOLLOWING PAGE]
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The undersigned Grantee hereby acknowledges receipt of an executed original of this Agreement and accepts the award of PRSUs covered hereby, subject to the terms and conditions of the Plan and the terms and conditions herein above set forth.
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Grantee
Date: ___________________________
This Agreement is executed by the Company on this ___ day of ____________, 20__.
TimkenSteel Corporation
By ___________________________________
Kristine C. Syrvalin
Executive Vice President, General Counsel &
Chief Human Resources Officer
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Exhibit A
Statement of Management Objectives
This Statement of Management Objectives applies to the PRSUs granted to the Grantee on the Date of Grant memorialized the Agreement. Capitalized terms used in the Agreement that are not specifically defined in this Statement of Management Objectives have the meanings assigned to them in the Agreement or in the Plan, as applicable.
Section 1. Definitions. For purposes hereof:
(a) “Peer Group” means, of a benchmark group of 16 entities, the names of which are attached hereto as Annex A, those entities that remain in the Peer Group as of the end of the Performance Period (or the date of the Change in Control if Section 1(e)(ii) of this Exhibit A is applicable) after application of the Peer Group Adjustment Protocol.
(b) “Peer Group Adjustment Protocol” means: (i) if an entity listed in Annex A files for bankruptcy and/or liquidation, is operating under bankruptcy protection, or is delisted from its primary stock exchange because it fails to meet the exchange listing requirement, then such entity will remain in the Peer Group, but RTSR for the Performance Period will be calculated as if such entity achieved Total Shareholder Return placing it at the bottom (chronologically, if more than one such entity) of the Peer Group; (ii) if, by the last day of the Performance Period (or the date of the Change in Control if Section 1(e)(ii) of this Exhibit A is applicable), an entity listed in Annex A has been acquired, or has announced that it has entered into a definitive agreement the consummation of which will result in such entity’s acquisition, and/or the entity is no longer existing as a public company that is traded on its primary stock exchange (other than for the reasons as described in subsection (i) above), then such entity will not remain in the Peer Group and RTSR for the Performance Period will be calculated as if such entity had never been a member of the Peer Group; and (iii) except as otherwise described in subsection (i) and (ii) above, for purposes of this Statement of Management Objectives, for each of the entities listed in Annex A, such entity will be deemed to include any successor to all or substantially all of the primary business of such entity at end of the Performance Period.
(c) “Relative Total Shareholder Return” or “RTSR” means the percentile rank of the Company’s Total Shareholder Return among the Total Shareholder Returns of all members of the Peer Group (including the Company), ranked in descending order, at the end of each of the first year, first two years and full three years, respectively, of the Performance Period, as applicable (the “1-year Nested Period”, “2-year Nested Period” and “3-year Nested Period”, respectively, and each, a “Nested Period”) (or the date of the Change in Control if Section 1(e)(ii) of this Exhibit A is applicable).
(e) “Total Shareholder Return” means, for each Nested Period, with respect to each of the Common Shares and the common stock of each of the members of the Peer Group, a rate of return reflecting stock price appreciation, plus the reinvestment of
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dividends in additional shares of stock, from the beginning of the Performance Period through the end of such Nested Period. Total Shareholder Return will be calculated as follows:
(i) Except as provided in clause (ii), for each Nested Period, Total Shareholder Return will be calculated for the Company and each member of the Peer Group by measuring the ending stock price for the applicable calendar year against the beginning price at the start of the Performance Period. For purposes of calculating Total Shareholder Return for each of the Company and the members of the Peer Group, the beginning stock price will be based on the average closing stock price for the 20 trading days immediately preceding the first day of the Performance Period on the principal stock exchange on which the stock then traded and the ending stock price for the applicable calendar year during the Nested Period will be based on the average closing stock price for the 20 trading days ending on December 31 of such applicable calendar year in the Nested Period on the principal stock exchange on which the stock then trades.
(ii) If a Change in Control occurs during the Restriction Period, and Section 4(c) of the Agreement applies to the PRSUs, (A) for purposes of determining Total Shareholder Return, the last day of the Performance Period will be the date of the Change in Control, and (B) Total Shareholder Return for the last Nested Period during the Performance Period will be calculated for the Company and each member of the Peer Group using a beginning stock price based on the average closing stock price for the 20 trading days immediately preceding the first day of the Performance Period on the principal stock exchange on which the stock then traded, and the ending stock price for the Company will be the “Sale Price” (as defined below) and for each member of the Peer Group will be based on the average closing stock price for the 20 trading days ending on the date of the Change in Control on the principal stock exchange on which the stock then traded. The “Sale Price” will be the amount of consideration per Common Share that shareholders of the Company receive upon consummation of the Change in Control (including the fair market value, as determined by the Committee, of any non-cash consideration); provided that if the Change in Control is not the result of a transaction in which shareholders receive consideration, the “Sale Price” will be the closing price of a Common Share on the last trading day immediately preceding the date of the Change in Control.
Section 2. Performance Matrices.
For each Nested Period during the Performance Period, from 0% to 200% of the PRSUs will be deemed to be the payout percentage (“Payout Percentage”) for such Nested Period based on achievement of the Management Objectives measured by RTSR performance during the Nested Period, in each case as follows (with the percentage of PRSUs (rounded to the nearest whole PRSU) earned for the entire Performance Period (including in the event of a Change in Control occurring during the Restriction Period) determined by taking the sum (rounded to two decimal places) of (i) the Payout Percentage calculated for the 1-year Nested Period multiplied by 25%, (ii) the Payout Percentage calculated for the 2-year Nested Period multiplied by 25% and (iii) the Payout Percentage calculated for the 3-year Nested Period multiplied by 50%; provided, however, notwithstanding the percentage determined in accordance with the foregoing
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calculation, if RTSR performance for the 3-year Nested Period is negative, the percentage of PRSUs earned for the entire Performance Period will be limited to and may not exceed 150% ):
Performance Level | Relative Total Shareholder Return | Payout Percentage |
Below Threshold | Ranked below 25th percentile | 0% |
Threshold | Ranked at 25th percentile | 50% |
Target | Ranked at 50th percentile | 100% |
Above Target | Ranked at or above 75th percentile | 150% |
Maximum | Ranked at or above 90th percentile | 200% |
Section 3. Number of PRSUs Earned. The Committee will determine whether and to what extent the goals relating to the Management Objectives described herein have been satisfied for the Performance Period and will determine the number of PRSUs that will become earned hereunder and under the Agreement on the basis of the following:
(a) Below Threshold. If, upon the conclusion of a Nested Period, RTSR for the Nested Period falls below the threshold level, as set forth in the Performance Matrices, the Payout Percentage will be zero for such Nested Period.
(b) Threshold. If, upon the conclusion of a Nested Period, RTSR for the Nested Period equals the threshold level, as set forth in the Performance Matrices, 50% will be the Payout Percentage for such Nested Period.
(c) Between Threshold and Target. If, upon the conclusion of a Nested Period, RTSR for the Nested Period exceeds the threshold level, but is less than the target level, as set forth in the Performance Matrices, a percentage between 50% and 100% (determined on the basis of straight-line mathematical interpolation) will be the Percentage Payout for such Nested Period.
(d) Target. If, upon the conclusion of a Nested Period, RTSR for the Nested Period equals the target level, as set forth in the Performance Matrices, 100% will be the Payout Percentage for such Nested Period.
(e) Between Target and Above Target. If, upon the conclusion of a Nested Period, RTSR for the Nested Period exceeds the target level, but is less than the above target level, as set forth in the Performance Matrices, a percentage between 100% and 150% (determined on the basis of straight-line mathematical interpolation) will be the Payout Percentage for such Nested Period.
(f) Above Target. If, upon the conclusion of a Nested Period, RTSR for the Nested Period equals the above target level, as set forth in the Performance Matrices, 150% will be the Payout Percentage for such Nested Period.
(g) Between Above Target and Maximum. If, upon the conclusion of a Nested Period, RTSR for the Nested Period exceeds the above target level, but is less than the maximum level, as set forth in the Performance Matrices, a percentage
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between 150% and 200% (determined on the basis of straight-line mathematical interpolation) will be the Payout Percentage for such Nested Period.
(f) Equals or Exceeds Maximum. If, upon the conclusion of a Nested Period, RTSR for the Nested Period equals or exceeds the maximum level, as set forth in the Performance Matrices, 200% will be the Payout Percentage for such Nested Period.
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Annex A
2023 Peer Group
Company Name | Ticker Symbol |
ATI Inc. | ATI |
Ampco-Pittsburgh Corporation | AP |
Ascent Industries Co. | ACNT |
Carpenter Technology Corporation | CRS |
Commercial Metals Company | CMC |
Friedman Industries, Incorporated | FRD |
Haynes International, Inc. | HAYN |
Nucor Corporation | NUE |
Olympic Steel, Inc. | ZEUS |
Reliance Steel & Aluminum Company | RS |
Ryerson Holding Corporation | RYI |
Schnitzer Steel Industries | SCHN |
Steel Dynamics, Inc. | STLD |
United States Steel Corporation | X |
Universal Stainless & Alloy Products, Inc. | USAP |
Worthington Industries, Inc. | WOR |
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