Exhibit 10.13
PENTAIR, INC.
COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
As
Amended and Restated
Effective January 1, 2008
SECTION 1
BACKGROUND AND PURPOSE
1.1 Background
. Effective as of January 17, 1986, Pentair, Inc.
adopted a Compensation Plan for Non-Employee Directors. This Plan
permits such directors to elect to receive, at some future time as
they may designate, payment in shares of Pentair common stock of
the fees which would otherwise be paid to them currently in cash
for services performed as a director. The Plan has been amended and
restated several times since its adoption, with the last such
restatement made effective May 1, 2004.
The 2004 restatement was done to
comply with rules issued by the New York Stock Exchange regarding
equity compensation plans, to clarify certain administrative
procedures, to incorporate amendments adopted since the
Plan’s last restatement, and to limit the Plan to a term of
ten (10) years.
Pentair is again amending the Plan,
by way of restatement, to comply with applicable provisions of
Section 409A of the Internal Revenue Code of 1986, as amended,
and Treasury Regulations thereunder.
1.2 Purpose .
Pentair has created this Plan to permit its non-employee directors
to receive retainer and meeting fees currently in cash or elect to
defer such compensation for future payment in shares of Pentair
common stock, together with earnings on such deferred compensation
as measured by changes in the value of said stock.
SECTION 2
DEFINITIONS
Unless the context clearly requires
otherwise, when capitalized the terms listed below shall have the
following meanings when used in this Section or other parts of the
Plan:
(a)
“Account” is an account maintained under the
Plan by the Plan Agent to record a Director’s Share
Units.
(b)
“Administrator” is Pentair.
(c) “Board”
is the Board of Directors of Pentair, as elected from time to
time.
(d) “Change in
Control” is any one of the following:
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(i) |
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When a Person, or more than one Person acting as a group,
acquires more than fifty percent (50%) of the total fair market
value or total voting power of Pentair’s stock; |
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(ii) |
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When a Person, or more than one Person acting as a group,
acquires within a twelve (12) month consecutive period, ending
with the date of the most recent stock acquisition, stock of
Pentair possessing at least thirty percent (30%) of the total
voting power of Pentair’s stock; |
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(iii) |
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When a majority of the members of Pentair’s Board is
replaced within a twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the
members of such Board as constituted before such appointment or
election; or |
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(iv) |
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When a Person, or more than one Person acting as a group,
acquires within a twelve (12) month consecutive period assets
from Pentair or an entity controlled by Pentair that have a total
gross fair market value equal to seventy-five percent (75%) of the
total fair market value of the assets of Pentair and all such
entities. |
Once a
Person or group acquires stock meeting the thresholds set forth in
paragraphs (i) and (ii) immediately preceding, additional
acquisitions of such stock by that Person or group shall be ignored
in determining whether another Change in Control has occurred.
Asset transfers between or among controlled entities as determined
before such transfers shall not be considered in applying paragraph
(iv) immediately preceding.
(e) “Code”
is the Internal Revenue Code of 1986, as amended.
(f) “Deferred
Compensation” is an amount of Fees or meeting attendance
fees, the payment of which a Director has elected to receive at
some future time pursuant to the terms of the Plan, together with
any matching contributions made by Pentair with respect to Fees
deferred.
(g)
“Director” is a member of the Board who is
neither simultaneously also an employee of Pentair or a related
company, nor an individual rendering other services to Pentair or a
related company as an independent contractor.
(h) “Fees”
are a Director’s annual Board and committee retainer and
committee chair and lead director fees and other similar amounts,
excluding meeting attendance fees, paid periodically by
Pentair.
(i)
“Pentair” is Pentair, Inc., a Minnesota
corporation.
(j) “Person”
is any individual, firm, partnership, corporation or other entity,
including any successor (by merger or otherwise) of such entity, or
a group of any of the foregoing acting in concert.
(k) “Plan”
is the Pentair, Inc. Compensation Plan for Non-Employee Directors
as described in this plan document effective January 1, 2008,
and as it may be amended from time to time thereafter.
(l) “Plan
Agent” is the entity duly appointed by Pentair to
(i) receive funds resulting from a Director’s deferral
of Fees, from Pentair matching contributions and from dividends
declared on Stock; (ii) purchase shares of Stock with such
funds and (iii) maintain Plan Accounts.
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(m) “Share
Units” are the units used to credit Deferred Compensation
to an Account, which units are valued by reference to the market
value per share of Stock on the date the Share Units are allocated
to Accounts by the Plan Agent.
(n) “Stock”
is Pentair common stock, par value $0.16-2/3 per share.
(o) “Year”
is the twelve (12) consecutive month period beginning January
1 and ending December 31.
SECTION 3
DEFERRAL OF FEES
3.1 Eligibility
. Upon becoming a member of the Board, a Director may elect to
defer receipt of payment of some or all of the Fees paid on account
of service as a Director until such future time as the Director
shall designate. A Director may also make a deferral election with
respect to meeting attendance fees. If a Director does not make a
timely deferral election with respect to the Fees or meeting
attendance fees payable for a Year, then all such amounts shall be
paid in cash to the Director.
3.2 Deferral
Election . (a) General Rule . Each Year a Director
may elect to defer receipt of a designated dollar amount or
percentage of Fees and meeting attendance fees, with any percentage
designation being made in ten percent (10%) increments up to one
hundred percent (100%) of such amounts, and to receive such amount
as Deferred Compensation. No election to receive Deferred
Compensation shall be valid unless entered into prior to the time a
Director becomes entitled to receipt of Fees or meeting attendance
fees. Generally, a deferral election must be made prior to the
first day of the Year in which the amounts to be deferred are
earned; but for individuals who first become Directors during a
Year, the deferral election for such first Year must be made no
later than thirty (30) days following the date such
individual’s Board service begins. A deferral election is
irrevocable with respect to the Year for which such election is
made. Once the time for making a timely election has passed, a
Director who did not timely make a deferral election for a Year
shall be deemed to have elected to not participate in the
Plan.
(b) Former Director . A
Director who was eligible to participate in the Plan, who loses
such eligibility by reason of ceasing to serve on the Board or
otherwise, and who again becomes eligible to participate in the
Plan, shall be able to again make an election to defer payment of
Fees and meeting attendance fees as provided in Code section 409A.
If the individual can instead qualify as a newly elected Director,
then the election rule for such Directors will apply.
3.3 Matching
Contribution . Pentair shall make a matching contribution
each month on behalf of each Director who has elected to defer
payment of some or all of the Fees otherwise payable in cash to the
Director. Said matching contribution shall be equal to fifteen
percent (15%) of such amount of the Fees as the Director shall have
elected to defer hereunder.
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3.4 Accounting for
Deferred Compensation . The Administrator shall cause the
Plan Agent to establish an Account for each Director who elects to
participate in the Plan. All Deferred Compensation shall be
allocated to Accounts as Share Units.
3.5 Purchase of
Stock . The Plan Agent shall purchase Stock on the open
market with the Deferred Compensation funds received from Pentair.
The Plan Agent shall make all such purchases over one (1) or
more business days each month, as agreed to by the Plan Agent and
Pentair. All Stock so purchased shall be allocated to Accounts
based on the average purchase price obtained over said monthly
purchase period and held in a street name or a nominee name; no
Director shall have voting or other ownership rights with respect
to any Stock acquired for purposes of the Plan. Stock purchased
under the Plan by the Plan Agent shall be held by Pentair as an
investment to assist Pentair in meeting its obligation to pay
Deferred Compensation to Directors.
Share Units allocated to Accounts
shall be adjusted to reflect Stock dividends or splits or other
similar adjustments. Cash dividends paid with respect to Stock
purchased for purposes of the Plan shall be used to purchase Stock
and allocated to Accounts as Share Units.
3.6 Time of
Distribution of Deferred Compensation . (a) General
. Except as otherwise provided for in the Plan, or as designated by
the Director at the time a deferral election is made, the Director
shall receive his or her entire Account balance allocable to a Year
within ninety (90) days of the first to occur of the
Director’s (i) ceasing to be a member of the Board for
any reason other than death, (ii) death, or (iii) a
Change in Control.
(b) Specific Dates of
Distribution . A Director may timely elect to receive
distribution of his or her entire Account balance allocable to a
Year as of one specific future date or one objectively determinable
future event date (e.g., a Director’s sixty-fifth (65th)
birthday). Such an election, once finally effective, cannot be
changed by the Director. In the event of a Change in Control, a
Director who has elected a specific future date or an objectively
determinable future event date shall remain entitled to payment on
such date, regardless of whether a Change in Control shall first
occur. In the event of the death of a Director prior to the date
elected hereunder f
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