Exhibit 10.6
RSU PERFORMANCE BASED GRANT LETTER
Date
Name
Street Address
City, State Zip Code
Dear Name:
American Woodmark Corporation (the “Company”) has established a program that includes a performance based opportunity under which you may receive an Award of restricted stock units (the “Award”). The opportunity outlined below is based on the achievement of certain predetermined performance metrics for fiscal ______. The potential Award is subject to the terms set forth in this letter and in the American Woodmark Corporation 2004 Amended and Restated Stock Incentive Plan For Employees (the “Plan”), a copy of which is attached. Capitalized terms that are not defined in this letter shall have the meaning assigned to them under the Plan.
The terms of your opportunity are as follows:
I. In consideration of your agreements contained in this letter, the Company has established a plan under which you may be granted up to ________ restricted stock units (RSU’s). Each RSU represents the right to receive one share of the voting common stock of the Company based on the Company’s attainment of certain performance metrics for fiscal _______.
II. Your plan carries the following provisions:
A. | The Company and the Compensation Committee have approved an operating plan for fiscal ______. |
B. | The operating plan includes three primary categories: income statement achievement, balance sheet management, and organizational development. |
C. | The Company and the Compensation Committee have developed specific measurements within the three categories. Each measurement has a low case, a base case, and a high case. The measurements and case values are detailed in Attachment A. |
D. | As soon as practical after the close of fiscal _______, the Compensation Committee will evaluate Company performance based on the measurements and establish a value earned based on achievement in each of the three categories. While the Committee will utilize the measurements as the basis of the evaluation, the Committee may, in its sole discretion, consider other factors in determining the amount of the opportunity to be granted. |
E. | At the conclusion of evaluation, the Compensation Committee will assign a percentage earned in each of the three areas and you will receive an Award of RSU’s that will be converted into shares of the common stock of the Company once you meet the vesting requirement. For example, assuming that your total opportunity is 75 shares, a hypothetical evaluation may look as follows: |
Opportunity | Performance Achievement | Awarded RSU’s | ||||
Percent | Shares | |||||
Income Statement Achievement | 40% | 30 | X | 40% | = | 12 |
Balance Sheet Management | 40% | 30 | X | 80% | = | 24 |
Organizational Development | 20% | 15 | X | 60% | = | 9 |
100% | 75 | 45 | ||||
F. | The RSU’s in your Award will mature on __________________ (the “Maturity Date”). To meet the vesting requirement and receive your full Award, you must be an employee of the Company on the Maturity Date and must have maintained continuous employment from ________________ (“the Award Date”) through the Maturity Date. In the event your employment is terminated at any time for any reason other than retirement, death, disability or for any reason following a Change of Control, under the conditions defined herein between the Award Date and the Maturity Date, the full amount of your Award will be forfeited. |
G. | In the event you become separated from the Company because of retirement, death or disability, you may receive a pro-rated portion of the Award. If your separation date occurs after the Compensation Committee has completed its evaluation described in Section II.E., then you will receive the number of shares determined by dividing the number of days between the Award Date and your separation date, by the total number of days between the Award Date and the Maturity Date, multiplied by the number of RSU’s of your Award. If your separation date occurs before the Compensation Committee completes its evaluation described in Section II.E., then the full amount of your Award will be forfeited. |
For purposes of applying this Section G., retirement and disability are defined as follows:
· | Retirement: You separate from the Company’s employ, having attained both a) at least ten years of service in the Company’s employ, and b) the age of 55. |
· | Disability: You become 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 which has lasted or can be expected to last for a continuous period of not less than 12 months, as determined by the Compensation Committee in its reasonable discretion. |
H. | In the event of a Change of Control any time before the Maturity Date, you will receive the full amount of the Award if you are an employee on the date of the Change of Control and have maintained continuous employment from the Award Date through the date of Change of Control. “Change of Control” is defined for the purposes of this Section as: |
(i) The acquisition by any unrelated person of beneficial ownership (as that term is used for purposes of the Securities Exchange Act of 1934) of 50% or more of the then outstanding shares (i) of common stock of the Company or the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors. The term “unrelated person” means any person other than (x) the Company and its Subsidiaries, (y) an employee benefit plan or trust of the Company or Its Subsidiaries, and (z) a person who acquires stock of the Company pursuant to an agreement with the Company that is approved by the Board in advance of the acquisition, unless the acquisition results in a Change of Control pursuant to subsection (ii) below. For purposes of this subsection, a “person” means an individual, entity or group, as that term is used for purposes of the Act.
(ii) Any tender or exchange offer, merger or other business combination, sale of assets or any combination of the foregoing transactions, and the Company is not the surviving corporation.
(iii) A liquidation of the Company.
III. You agree, as a condition of receiving the Award to pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, all Applicable Withholding Taxes with respect to the Award. Any distributions on the Award as defined herein will be made with a certificate of common shares. Unless otherwise agreed, the Company will withhold from the Award shares sufficient to cover all Applicable Withholding Taxes. Should you choose to receive the full Award in shares, no stock certificate will be issued until the Applicable Withholding Taxes have been paid or arrangements satisfactory to the Company have been made.
IV. This Award is not transferable by you except by will or by the laws of descent and distribution.
V. In the event of changes in the structure of the Company, appropriate adjustments will be made according to the Plan.
VI. In consideration of the grant of this Award, you agree that you will comply with such lawful conditions as the Board of Directors or the Compensation Committee may impose on the Award, and will perform such duties as may be assigned from time to time by the Board of Directors or by the executive officers of the Company operating under the authority of the Board; provided, however, that the provisions of this sentence shall not be interpreted as affecting the right of the Company to terminate your employment at any time.
VII. Until the RSU’s are converted into actual shares of the Company’s stock, your Award will not convey actual rights normally accruing to shareholders, including but not limited to the right to participate in shareholder votes or the right to receive dividends.
VIII. Timing of the Company’s payment of your Award will vary, as follows:
a. For employees who are continuously employed by the Company through the Maturity Date, Award payment will occur as soon as administratively practicable (within 60 days) after the Maturity Date.
b. For employees who either 1) die, or 2) become disabled before the Maturity Date but after the Compensation Committee completed its performance evaluation described in Section II. E., payment of the Award will occur as soon as administratively practicable (within 60 days) after the employee’s separation date.
c. For employees who separate from the Company’s employ due to either 1) retirement prior to the Maturity Date but after the Compensation Committee completed its performance evaluation described in Section II.E., or 2) any reason after becoming fully vested due to a Change of Control, timing of the Award payment will depend upon whether or not the employee is deemed to be a “Top 50 employee”of the Company as defined by Section 409A(a)(2)(B)(i) of the Internal Revenue Code. Generally speaking, employees who earn more than $160,000 of annual compensation may meet this definition.
If an employee is not a Top 50 employee, then payment will occur as soon as administratively practicable (within 60 days) after the employee’s date of separation.
If an employee qualifies as a Top 50 employee, then payment may occur as soon as administratively practicable (within 60 days) after the date that is six months after the employee’s separation date.
Please sign the second copy of this letter and return it to Jon Wolk, Vice President of Finance & CFO, American Woodmark Corporation, 3102 Shawnee Drive, Winchester, VA 22601, to acknowledge your acceptance of the terms of this Option and receipt of the foregoing documents.
Your signature and return of a copy of this letter shall be deemed as your understanding and acceptance to the terms and conditions pertaining to this plan as outlined in this letter and the attached Plan description.
American Woodmark Corporation
(s/_______________________________________)
Chief Executive Officer
Agreed to:
By ____________________________