Exhibit 10.3
February 28, 2006
2006 Performance-Vesting
Restricted (“PVR”) Share Award
«Name»
Dear Plan Participant:
This letter confirms the award made
to you by the Compensation Committee of the Board of Directors
under the Performance-Vesting Restricted Share Award program. The
PVR share program is designed to compensate key executives based on
the Company’s achievement of corporate performance goals, pay
for performance and promote the retention of key employees. The PVR
share program emphasizes long-term compensation value and
encourages stock retention among the Company’s key
executives.
Participants in the program can earn
shares of West stock based on the Company’s
return-on-invested capital (ROIC) and revenue growth over the next
three-year period (i.e., 2006-2008) as compared to ROIC and revenue
growth targets established by the Compensation
Committee.
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The ROIC Target is:
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10%
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The Revenue Growth Target
is:
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10%
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Your Target Award amount
is
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«PVRS»
shares
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If the Company achieves 100% of the
ROIC and Revenue Growth targets, you will receive 100% of your
Target Award in shares of West common stock. A higher performance
versus the targets could result in a greater number of shares being
awarded, and fewer shares will be awarded if Company performance
falls short of the targets. Please refer to the attached Long Term
Incentive Plan with 2006 Revisions Plan Summary to determine how
your award will vest. Also attached is additional information about
the terms and conditions of your PVR share award.
This Award shall be governed by all
of the terms and conditions contained in this award letter and the
West Pharmaceutical Services, Inc. 2004 Stock-Based
Compensation Plan (the “Plan”). In the event of a
conflict between this award letter and the Plan, the provisions of
the Plan shall control for any and all purposes.
I am pleased that you are a
participant in this long-term incentive compensation program and
trust that your participation will be beneficial to both you and
the Company.
Please review the attached
documentation carefully.
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Sincerely,
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/s/ Richard D. Luzzi
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Richard D. Luzzi
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Vice President Human Resources
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RDL/rmm
Attachments
Terms and
Conditions of the Performance-Vesting Share Awards
Performance Measures and
Performance Period
The primary feature of the
Performance-Vesting Restricted (PVR) Share Award program is that
the participant receives shares of West common stock contingent
upon corporate performance over a designated period of
time.
The measures of corporate
performance are Return on Invested Capital (“ROIC”) and
Revenue Growth.
a.
ROIC means the average of the
Company’s net operating profit (without regard to taxes)
divided by the average outstanding equity plus debt.
b.
Revenue Growth means the compound
annual growth rate in net sales for the Company.
The performance period of this grant
is three years. Details regarding the vesting of your award,
including the applicable performance formula targets, for the
performance period are shown in the attached Long Term Incentive
Plan with 2006 Revisions Plan Summary.
After the end of the performance
period, West's performance will be calculated on both
measures. The results are then tabulated to determine the
actual number of shares, if any, to be awarded.
Target Award and
Dividends
Your Target Award is an amount of
PVR shares that would be paid to you if the Company hits 100% of
the ROIC and Revenue Growth performance targets. Additional
PVR shares will be awarded if actual performance exceeds the
performance targets, and fewer PVR shares will be awarded if actual
performance falls short of the performance targets. No PVR
shares will be awarded if actual performance falls below the
minimum acceptable level.
During the performance period, your
account will be credited with additional PVR shares as if the
Target Award was achieved and reinvested in dividends on West
common stock. At the end of the performance period, you will
receive additional shares of common stock equal to the amount of
PVR shares purchased through this dividend-reinvestment
feature.
Any shares awarded will be
transferred to you in approximately the first quarter of the year
following the last day of a performance period.
Delivery of the shares may be
deferred in accordance with the deferral feature of the
Company’s Non-Qualified Deferred Compensation Plan for
participants in certain countries as determined by the
Committee. Details of the deferral opportunity will be
provided to participants in that plan prior to the end of each
performance period.
Tax
Consequences
Any shares paid under this program
will be considered taxable income and subject to tax pursuant to
the laws of the country in which you work/live. For U.S. tax
purposes, withholding taxes are due upon delivery of the shares and
will be withheld from any payment. Additional information
about the U.S. tax consequences of your award are contained in the
latest plan information statement.
Early Vesting
A Change in Control of the Company
(as defined under the West 2004 Stock-Based Compensation Plan)
prior to the end of a designated performance period will result in
an immediate vesting of the full amount of your Target Award.
These shares will be distributed to you as soon as practical after
the event.
Forfeiture Provisions
All unvested PVR shares will be
forfeited under the following circumstances:
1.
Your employment terminates for any
reason prior to the end of the performance period; or
2.
If at any time during your
employment or within 3 months following termination of your
employment, you directly or indirectly engage in activity harmful
to, or not in the best interest of, the Company. Such
activity includes, without limitation:
·
conduct related to your employment for which either criminal or
civil penalties against you may be sought;
·
acquisition of a direct or indirect
interest or an option to acquire such an interest in any person or
entity engaged in competition with the Company’s business
(other than an interest of not more than 5 percent of the
outstanding stock of any publicly traded company);
·
accepting employment with or serving
as a director, officer, employee or consultant of, or furnishing
information to, or otherwise facilitating the efforts of, any
person or entity engaged in competition with the Company’s
business;
·
soliciting, employing, interfering
with, or attempting to entice away from the Company any employee
who has been employed by the Company in an executive or supervisory
capacity within one year prior to such solicitation, employment,
interference or enticement;
·
violation of Company policies,
including the Company’s insider-trading policy; or
·
using for your or others, or
disclosing to others, any confidential or proprietary information
of the Company in contravention of any Company policy or
agreement.
Long Term
Incentive Plan
with 2006 Revisions
Plan Summary
Background and Basic Plan
Design
The Long Term Incentive Plan is
designed to implement a balanced approach to the achievement of
multiple long term strateg
