Exhibit 10.3
Performance Restricted
Stock Unit Agreement
Flowserve
Corporation
2004 Stock Compensation
Plan
This
Performance Restricted Stock Unit Agreement (the
“Agreement”) is made and entered into by and between
Flowserve Corporation, a New York corporation (the
“Company”) and «First_Name»
«Last_Name» (the “Participant”) as of
, 2007 (the “Date of Grant”).
W I T
N E S S E T H
WHEREAS,
the Company has adopted the Flowserve Corporation 2004 Stock
Compensation Plan (the “Plan”) to strengthen the
ability of the Company to attract, motivate and retain Employees,
Outside Directors and Consultants who possess superior capabilities
and to encourage such persons to have a proprietary interest in the
Company; and
WHEREAS,
the Organization and Compensation Committee of the Board of
Directors of the Company believes that the grant of Performance
Restricted Stock Units to the Participant as described herein is
consistent with the stated purposes for which the Plan was adopted;
and
NOW,
THEREFORE, in consideration of the mutual covenants and conditions
hereafter set forth and for other good and valuable consideration,
the Company and the Participant agree as follows:
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1. |
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Performance Restricted Stock Units |
In
order to encourage the Participant’s contribution to the
successful performance of the Company, and in consideration of the
covenants and promises of the Participant herein contained, the
Company hereby grants to the Participant as of the Date of Grant,
an Award of «M___of_Shares_Granted» Performance
Restricted Stock Units (the “Performance Shares”),
which may be converted into the number of shares of Common Stock of
the Company equal to the number of vested Performance Shares,
subject to the conditions and restrictions set forth below and in
the Plan.
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2. |
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Vesting and Conversion of Performance Shares into Common
Stock |
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(a) |
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Prior to March 31, 2007, the Committee shall establish a
threshold, target and maximum Performance Goal with respect to the
Award, in accordance with the requirements of Section 6.7 of
the Plan, based upon the Company’s return on net assets for
the period beginning January 1, 2007 and ending
December 31, 2009 (the “Performance Cycle”).
Following the end of the Performance Cycle, the Committee shall
compare the actual performance of the Company with the Performance
Goal and certify, in writing, whether and to what extent the
Performance Goal has been achieved for such Performance Cycle.
Subject to the provisions of Paragraph 3 below, upon written
certification by the Committee, which shall occur no later than
March 31, 2010, whether, and to what extent, the Performance
Goal has been achieved, the Performance Shares will become vested
(the “Vesting Date”) in accordance with the table set
forth below; provided, however, that the Performance Shares shall
not vest and shall be forfeited to the extent the Performance Goal
is not achieved for the Performance Cycle. The number of
Performance Shares vested is contingent upon the Company’s
achievement of the Performance Goal for the Performance Cycle. |
1
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| Performance Goal |
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Percentage of Performance Shares
Vested |
|
Achieved |
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and Eligible for Conversion |
| Less Than Threshold |
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0% |
| Threshold |
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25% |
| Target |
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100% |
| Maximum |
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200% |
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(b) |
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Except as otherwise provided in Paragraph 2(e) below, no later
than the date that is two and a half (2 1 / 2 ) months following the close of the
calendar year in which the Performance Shares vest in accordance
with the table set forth in Paragraph 2(a) above, the Company shall
convert the vested Performance Shares into the number of whole
shares of Common Stock equal to the number of vested Performance
Shares, subject to the provisions of the Plan and the
Agreement. |
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(c) |
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Following conversion of the vested Performance Shares into
shares of Common Stock, such shares of Common Stock will be
transferred of record to the Participant and a certificate or
certificates representing said Common Stock will be issued in the
name of such Participant and delivered to the Participant. The
delivery of any shares of Common Stock pursuant to this Agreement
is subject to the provisions of Paragraphs 6 and 8 below. |
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(d) |
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Each year that this Agreement is in effect, the Participant may
receive credits (“Dividend Equivalents”) based upon the
cash dividends that would have been paid on the number of shares of
Common Stock equal to 100% of the Performance Shares as if such
shares of Common Stock were actually held by the Participant.
Dividend equivalents shall be deemed to be reinvested in additional
shares of Common Stock (which may thereafter accrue additional
dividend equivalents). Any such reinvestment shall be at the Fair
Market Value of the Common Stock at the time thereof. Dividend
Equivalents may be settled in cash or shares of Common Stock, or
any combination thereof, as determined by the Committee, in its
sole and absolute discretion. Following conversion of the vested
Performance Shares into shares of Common Stock, the Participant
also shall receive a distribution of the Dividend Equivalents
accrued with respect to such Performance Shares prior to the date
of such conversion. In the event any Performance Shares do not
vest, the Participant shall forfeit his or her right to any
Dividend Equivalents accrued with respect to such unvested
Performance Shares. |
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(e) |
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Notwithstanding the foregoing provisions of Paragraphs 2(c) and
2(d), the Committee may, in its sole and absolute discretion, in
lieu of distributing any shares of Common Stock to the Participant,
elect to pay the Participant an amount in cash equal to the Fair
Market Value on the date of conversion of the shares of Common
Stock that the Participant otherwise would be entitled to receive
pursuant to this Agreement. |
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3. |
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Effect of Termination of Employment or Services |
2
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(a) |
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The Performance Shares granted pursuant to this Agreement shall
vest in accordance with the provisions of Paragraph 2(a) above, as
long as the Participant remains employed by or continues to provide
services to the Company or a Subsidiary. If, however: |
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(i) |
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the Company and its Subsidiaries terminate the
Participant’s employment (or if the Participant is not an
Employee, determine that the Participant’s services are no
longer needed), or |
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(ii) |
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the Participant terminates employment (or if the Participant is
not an Employee, ceases to perform services for the Company and its
Subsidiaries), |
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Then, except as otherwise provided in Paragraphs 3(b) or 3(c)
below, the Performance Shares that have not previously vested in
accordance with the vesting schedule reflected in Paragraph 2(a)
above, as of the date of such termination of employment (or
cessation of services, as applicable), shall be forfeited by the
Participant to the Company. |
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(b) |
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In the event the Participant’s employment with the
Company terminates due to his or her Retireme |
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