GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED COMPENSATION PLAN II
1.
Introduction .
(a) The purpose of
the Plan is to provide deferred compensation to a select group of
executive employees and non-employee directors of the Company in
recognition of their contributions to the Company and its
affiliates. This document constitutes the written
instrument under which the Plan is maintained.
(b) This Plan is the
successor plan to the Granite Construction Incorporated Key
Management Deferred Compensation Plan, as amended through December
31, 2004 and the Key Management Deferred Incentive Compensation
Plan, as amended through December 31, 2004 (collectively, the
“Prior Plans”). Effective December 31, 2004,
the Prior Plans are frozen and no new deferrals or Company
contributions will be made to them; provided, however, that any
deferrals or Company contributions made under the Prior Plans
before January 1, 2005 shall continue to be governed by the terms
and conditions of the Prior Plans as in effect on December 31,
2004.
(c) Any deferrals and
Company contributions made under the Prior Plans after December 31,
2004 are deemed to have been made under this Plan and all such
deferrals and Company contributions shall be governed by the terms
and conditions of this Plan as it may be amended from time to time;
provided, however, that deferrals and Company contributions made in
2005 through 2007 are governed by the terms and conditions of this
Plan along with the terms and conditions set forth in the
Appendix.
(d) This Plan is
intended to be a plan that is unfunded and that is maintained by
Granite Construction Incorporated primarily for the purpose of
providing deferred compensation for a select group of management or
highly compensated employees within the meaning of the Employee
Retirement Income Security Act and for the benefit of the
Company’s non-employee directors. This Plan also
is intended to comply with the requirements of Section 409A of the
Code.
(e) The Board
approved the amendment and restatement of this Plan effective
January 1, 2010.
2.
Definitions .
(a) “
Account ” means as to any Participant the separate
account(s) established and maintained by the Company in order to
reflect his or her interest in the Plan. Each
Participant’s Account or Accounts will reflect (i)
allocations and earnings credited (or debited) thereto in
accordance with Section 5 and (ii) amounts payable at
different times and in different forms.
(b) “
Beneficiary ” means the person or persons designated
by the Participant or by the Plan under Section 7(g) to receive
payment of the Participant’s Account in the event of the
Participant’s death.
(c) “
Board ” means the Board of Directors of Granite
Construction Incorporated.
(d) “
Bonus ” means any cash bonus earned by a Participant,
including, but not limited to, (i) the cash bonus payable under the
Granite Construction Profit Sharing Cash Bonus Plan, if any and
(ii) the Participant’s usual and customary annual cash
incentive, if any.
(e) “ Change
in Control ” means the effective date of any one of the
following events but only to the extent that such change in control
transaction is a change in the ownership or effective control of
the Company or a change in the ownership of a substantial portion
of the assets of the Company as defined in the regulations
promulgated under Section 409A of the Code:
(i) an acquisition,
consolidation, or merger of the Company with or into any other
corporation or corporations, unless the stockholders of the Company
retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the surviving or
acquiring corporation or corporations; or
(ii) the sale,
exchange, or transfer of all or substantially all of the assets of
the Company to a transferee other than a corporation or partnership
controlled by the Company or the stockholders of the Company;
or
(iii) a transaction or
series of related transactions in which stock of the Company
representing more than thirty percent (30%) of the outstanding
voting power of the Company is sold, exchanged, or transferred to
any single person or affiliated persons leading to a change of a
majority of the members of the Board.
The Board shall have final authority to
determine, in accordance with Section 409A of the Code, whether
multiple transactions are related and the exact date on which a
Change in Control has been deemed to have occurred under
subsections (i), (ii), and (iii) above.
(f) “
Code ” means the Internal Revenue Code of 1986, as
amended.
(g) “
Committee ” means the Compensation Committee of the
Company’s Board of Directors and its delegatee, as
applicable.
(h) “
Company ” means Granite Construction Incorporated, a
Delaware corporation, and any other affiliated entity that is
designated from time to time by the Board. As to a
particular Participant, “Company” refers to the
corporate entity which is his or her employer. For purposes of
Sections 2(e) and (g), 5 and 10, “Company”
refers only to Granite Construction Incorporated.
(i) “
Disability ” means that an individual is (i) unable to
engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months or (ii) by reason of
any medically determinable physical o mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than three months under an accident
and health plan covering employees of the Company.
(j) “ Equity
Incentive Plan ” means the Granite Construction
Incorporated Amended and Restated 1999 Equity Incentive Plan, as
amended from time to time.
(k) “
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended.
(l) “
Identification Date ” means each December 31.
(m) “ Key
Employee ” means a Participant who, on an Identification
Date, is:
(i) An officer of the
Company having annual compensation greater than the compensation
limit in Section 416(i)(1)(A)(i) of the Code, provided that no more
than fifty officers of the Company shall be determined to be Key
Employees as of any Identification Date;
(ii) A five percent
owner of the Company; or
(iii) A one percent
owner of the Company having annual compensation from the Company of
more than $150,000.
If a Participant is identified as a Key
Employee on an Identification Date, then such Participant shall be
considered a Key Employee for purposes of the Plan during the
period beginning on the first April 1 following the Identification
Date and ending on the next March 31.
(n) “
Participant ” means each employee and non-employee
director of the Company who is designated as such from time to time
by the Committee.
(o) “
Performance Units ” means an award granted pursuant to
a Performance Unit Agreement under the Equity Incentive Plan.
(p) “
Plan ” means the Granite Construction Incorporated Key
Management Deferred Compensation Plan II, as set forth in this
instrument and as hereafter amended.
(q) “ Plan
Year ” means the calendar year.
(r) “ Prior
Plans ” means the Granite Construction Incorporated Key
Management Deferred Compensation Plan and the Granite Construction
Incorporated Key Management Deferred Incentive Compensation
Plan.
(s) “
Restricted Stock Units ” means an award granted
pursuant to a Restricted Stock Units Agreement under the Equity
Incentive Plan.
(t) “
Retirement ” means an employee-Participant’s
Separation from Service at or after (i) age 55 with ten years of
service or (ii) age 65 with five years of
service. Retirement means a non-employee
director-Participant’s Separation from Service at any
time.
(u) “
Separation from Service ” means termination of
employment with the Company, other than by reason of death.
(i) A Participant
shall not be deemed to have Separated from Service if the
Participant continues to provide services to the Company in a
capacity other than as an employee and if the former employee is
providing services at an annual rate that is fifty percent (50%) or
more of the services rendered, on average, during the immediately
preceding three full calendar years of employment with the Company
(or if employed by the Company less than three years, such lesser
period).
(ii) A Participant
shall be deemed to have Separated from Service if a
Participant’s service with the Company is reduced to an
annual rate that is less than twenty percent (20%) of the services
rendered, on average, during the immediately preceding three full
calendar years of employment with the Company (or if employed by
the Company less than three years, such lesser period).
(v) “
Unforeseeable Emergency ” means a severe financial
hardship to the Participant or Beneficiary resulting from:
(i) An illness or
accident of the Participant or Beneficiary, the Participant’s
or Beneficiary’s spouse, or the Participant’s or
Beneficiary’s dependent (as defined in Section 152(a) of the
Code); or
(ii) Loss of the
Participant’s or Beneficiary’s property due to casualty
(including the need to rebuild a home following damage to a home
not otherwise covered by insurance); or
(iii) Other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant or Beneficiary.
Hardship shall not constitute an Unforeseeable
Emergency under the Plan to the extent that it is, or may be,
relieved by:
(i) Reimbursement or
compensation, by insurance or otherwise;
(ii) Liquidation of
the Participant’s or Beneficiary’s assets to the extent
that the liquidation of such assets would not itself cause severe
financial hardship. Such assets shall include but not be limited to
stock options, Company stock, and 401(k) plan balances; or
(iii) Cessation of
deferrals under the Plan.
An Unforeseeable Emergency under the Plan does
not include (among other events):
(i) Sending a child
to college; or
(ii) Purchasing a
home.
3. Eligibility to
Participate . The Committee will, from time to time,
designate Company employees to be Participants. Each
employee-Participant selected by the Committee must belong to a
select group of management or highly compensated employees of the
Company. In addition, non-employee directors of the Company will
become Participants upon notification of eligibility from the
Committee. Non-employee directors are not eligible for
In-Service Distributions described in Section 7(c) or the survivor
benefit under Section 8.
4. Vesting
. Each Participant will always be 100% vested in his or
her Account; provided, however, that if a Participant is Separated
from Service for “Cause” (as such term is defined in
Section 2.1(d) of the Equity Incentive Plan), the Participant will
forfeit all amounts other than his or her own Bonus, Performance
Units and Restricted Stock Units deferrals, if any.
5. Additions to
Accounts .
(a) Participant
Bonus Deferrals . Each Participant may annually
elect to defer the receipt of a whole percentage (up to 100% or
such other percentage as may be determined by the Board) of his or
her Bonus(es).
(b) Participant
Performance Unit Deferrals . Effective June 15,
2007, each Participant who is at least 62 years of age on the last
day of the performance period applicable to of his or her
Performance Units award may elect to defer the receipt of the 100%
of the stock payable under his or her Performance Unit
agreement.
(c) Participant
Dividend Deferrals . Each Participant may annually
elect to defer the receipt of the full amount of the quarterly cash
dividends that are paid to the Participant under Section 13(a) of
the Granite Construction Employee Stock Ownership Plan.
(d) Company
Matching Contributions . Effective January 1, 2008,
the Company will credit, in accordance with the Company’s
regular payroll schedule, each employee-Participant's Account with
an amount equal to six percent of the first $100,000 a Participant
defers under Section 5(a) or Section 5(c) of the Plan in the
applicable Plan Year.
(e) Deemed
Investments . For each Plan Year, the balance of
each Participant’s Account (except that portion of the
Account consisting of deferred Performance Units or Restricted
Stock Units awards) will be credited with earnings based upon the
Participant’s investment allocation among a menu of
investment options selected in advance by the Company’s Vice
President and Director of Human Resources, Treasurer and Director
of Compensation and Benefits (collectively, the “Investment
Committee), which shall include a fixed-rate option.
(i) Investment
options will be determined by the Investment Committee. The
Investment Committee, in its sole discretion, shall be permitted to
add or remove investment options from the Plan menu from time to
time, provided that any such additions or removals of investment
options shall not be effective with respect to any period prior to
the effective date of such change.
(ii) A
Participant’s investment allocation constitutes a deemed, not
actual, investment among the investment options comprising the
investment menu. At no time shall a Participant have any real or
beneficial ownership in any investment option included in the
investment menu, nor shall the Company or any trustee acting on its
behalf have any obligation to purchase actual securities as a
result of a Participant’s investment allocation. A
Participant’s investment allocation shall be used solely for
purposes of adjusting the value of a Participant’s
Account.
A Participant shall
specify an investment allocation for his Account, or components
thereof, in accordance with procedures established by the
Committee. Allocation among the investment options must
be designated in increments of 1%. The Participant’s
investment allocation will become effective in accordance with
procedures established by the Committee.
A Participant may
change an investment allocation, both with respect to future
credits to the Plan and with respect to existing Accounts, and such
changes shall become effective, in accordance with procedures
adopted by the Committee.
(iii) If the
Participant fails to make an investment allocation with respect to
an Account, such Account shall be invested in an investment option,
the primary objective of which is the preservation of capital, as
determined by the Investment Committee.
(iv) Dividend
equivalents shall be credited in respect of the deferred
Performance Units and Restricted Stock Units. Such
dividend equivalents shall be converted into additional deferred
common stock equivalents covered by the deferred awards by dividing
(1) the aggregate amount or value of the dividends paid with
respect to that number of stock equivalents covered by the deferred
award by (2) the Fair Market Value (as defined in the Equity
Incentive Plan) per share of Company common stock on the payment
date for such dividend. Any additional stock equivalents
covered by the deferred Performance Units or Restricted Stock Units
credited by reason of such dividend equivalents shall be deferred
and subject to all the terms and conditions of this Plan.
(v) In the event of
any stock dividend, stock split, reverse stock split,
recapitalization, merger, combination, exchange of shares,
reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and
class of share equivalents subject to the deferred Performance
Units and Restricted Stock Units awards. Subject to
Section 11(c) below, if a majority of the shares which are of the
same class as the shares the underlie the share equivalents subject
to deferred Performance Units and Restricted Stock Units awards are
exchanged for, converted into, or otherwise become shares of
another corporation (the “New Shares”), the Committee
may unilaterally amend the deferred awards to provide that shares
that underlie the share equivalents subject to such deferred awards
are New Shares. In the event of any such amendment, the
number of share equivalents subject to deferred awards shall be
adjusted in a fair and equitable manner as determined by the
Committee, in its discretion. Notwithstanding the
foregoing, any fractional share equivalents resulting from an
adjustment pursuant to this Section 5(e)(v) shall be rounded down
to the nearest whole share equivalent. The adjustments
determined by the Committee pursuant to this Section 5(e)(v) shall
be final, binding and conclusive.
(f) Non-Employee
Director Deferrals . Each Participant who is a
non-employee director may annually elect to defer the receipt of a
whole percentage (up to 100% or such other percentage as may be
determined by the Board) of his or her annual retainer and meeting
fees.
(g) Participant
Restricted Stock Unit Deferrals . Effective for
Restricted Stock Units granted and earned on or after January 1,
2010, each Participant may elect to defer the receipt of a whole
percentage (up to 100% or such other percentage as may be
determined by the Board) of his or her Restricted Stock Units award
under his or her Restricted Stock Units agreement.
6. Deferral
Elections . Each Participant must complete a
deferral form for each Plan Year. To be effective, each
such deferral form must satisfy the following rules:
(a) Content and
Form Requirements . The deferral election form must
be signed and dated by the Participant, and must specify the
form(s) of payment and date(s) of distribution of the
Participant’s Account. A Participant’s
deferral election is irrevocable on the first day of the Plan Year
following the Plan Year in which it is made; provided, however,
that a Participant’s election shall be suspended for the
remainder of any Plan Year in which the such Participant receives a
distribution on account of an Unforeseeable Emergency and
thereafter the Participant must submit a new deferral election to
resume participant in the Plan; provided further, however, that a
Participant’s deferral election will terminate on the date
the Participant Separates from Service.
(b) Timing of
Deferral Elections . Except as provided in
subsections (i) through (iii) below, a Participant’s deferral
election must be received by the Committee before the beginning of
the Plan Year in which the amount to be deferred is
earned. Any such deferral election must be accompanied
by an election as to the time and form of payment of the
Participant’s Account.
(i) A
Participant’s election to defer Performance Units must be
received by the Committee at least six months prior to the date on
which the Performance Units are no longer subject to a substantial
risk of forfeiture (the vesting date); provided, however, that such
election shall be ma
