Exhibit 10.1
WATTS
WATER TECHNOLOGIES, INC.
MANAGEMENT STOCK PURCHASE
PLAN
Amended and Restated as of
January 1, 2005
I.
INTRODUCTION
The
purpose of the Watts Water Technologies, Inc. Management Stock
Purchase Plan (the “Plan”) is to provide equity
incentive compensation to selected management employees of Watts
Water Technologies, Inc. (the “Company”) and its
subsidiaries. Participants in the Plan may elect to receive
restricted stock units (“RSUs”) in lieu of all or a
portion of their annual incentive bonus and, in some circumstances,
make after-tax contributions in exchange for RSUs. Each RSU
represents the right to receive one share of the Company’s
Class A Common Stock (the “Stock”) upon the terms and
conditions stated herein. RSUs are granted at a discount of
33% from the fair market value of the Stock on the Valuation Date
(as defined in Subsection IV(B) below). Vested RSUs will be
settled in shares of Stock after a period of deferral selected by
the participant, or upon termination of employment, if
earlier.
The
Plan is intended to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the
guidance promulgated thereunder (“Section 409A”).
The Plan should be interpreted in a manner to comply with Section
409A. In addition, this Plan is a “top hat plan”
subject to certain provisions of the Employee Retirement Income
Security Act of 1974.
II.
ADMINISTRATION
The Plan shall be
administered by the Compensation Committee of the Board of
Directors of the Company (the “Committee”). Each
member of the Committee shall be a “non-employee
director” within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the
“Act”). The Committee shall have complete
discretion and authority with respect to the Plan and its
application, except as
expressly limited
herein. Determinations by the Committee shall be final and
binding on all parties with respect to all matters relating to the
Plan.
III.
ELIGIBILITY
Management
employees of the Company and its subsidiaries as designated by the
Committee shall be eligible to participate in the Plan.
IV.
PARTICIPATION
A.
Restricted Stock Units . Participation in the Plan
shall be based on the award of RSUs. Each RSU awarded to a
participant shall be credited to a bookkeeping account established
and maintained for that participant.
B.
Valuation of RSUs; Fair Market Value of Stock . The
value of each RSU, for purposes of the Plan, shall be determined as
follows: The “Cost” of each RSU shall be equal to
67% of the fair market value of the Stock on the relevant Valuation
Date. The “Valuation Date” for each year is the
date that is the third business day after the date that the Company
releases its year-end earnings to the public. The
“Value” of each RSU shall be equal to its Cost plus
simple interest per annum on such amount at the one-year U.S.
Treasury Bill rate (as published in The Wall Street Journal
) in effect on the Valuation Date and each anniversary
thereof. For all purposes of the Plan, the “fair market
value of the Stock” on any given date shall mean the last
reported sale price at which Stock is traded on such date or, if no
Stock is traded on such date, the most recent date on which Stock
was traded, as reflected on the New York Stock Exchange.
C.
Election to Participate . Each year, each participant
may elect to receive an award of RSUs under the Plan in lieu of any
bonus payable for a subsequent calendar year by completing a Bonus
Deferral and RSU Subscription Agreement (“Subscription
Agreement”). The Subscription Agreement shall provide
that the participant elects to receive RSUs in lieu of a specified
portion of any annual incentive bonus to be earned in the following
calendar year. Such portion may be expressed as either (1) a
specified percentage of the participant’s actual bonus
amount; (2) the lesser of a specified
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percentage or a
specified dollar amount of the participant’s actual bonus
amount; or (3) a specified dollar amount up to 100% of the
participant’s targeted maximum bonus. Any dollar amount
specified must be at least $1,000; and any percentage specified
must be at least 10% and not more than 100%. Amounts
specified pursuant to methods (1) and (2) are entirely contingent
on the amount of bonus actually awarded. Where the
participant specifies a fixed dollar amount pursuant to method (3),
however, the Subscription Agreement shall provide that, if the
specified dollar amount exceeds the actual bonus amount awarded,
the participant undertakes to pay the excess, in cash or by check,
to the Company within five days after the date the participant
receives notice of the bonus amount.
D.
Deferral Beyond Vesting Period . Each Subscription
Agreement shall specify a deferral period, beyond the three-year
vesting period, for the RSUs to which it pertains. The
deferral period shall be expressed as a number of whole years, not
less than three, beginning on the Valuation Date.
Subscription Agreements must be received by the Company no later
than December 31 of the year prior to the year in which the bonus
amount will be earned. Notwithstanding the foregoing, to the
extent that any bonus deferred hereunder constitutes
“performance-based compensation” within the meaning of
Section 409A, Subscription Agreements with respect to such
compensation must be received by the Company no later than six
months before the end of the so-called performance period to which
such bonus relates.
E.
Changes to Deferral Period before December 31, 2005 .
At any time before December 31, 2005, a participant may change the
deferral period specified in a Subscription Agreement that was in
effect prior to December 31, 2005.
F.
Changes to Deferral Period after January 1, 2006 .
Effective January 1, 2006, a participant may change the deferral
period specified in a Subscription Agreement to extend the deferral
period, provided, however, that any such change must be made at
least 12 months before the original distribution date. Any
such change shall not become
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effective for 12 months
after it is made. In addition, any such change must extend
the deferral period for a minimum of five additional years from the
original distribution date. Participants are not permitted to
change a deferral to reduce the length of a deferral
period.
G.
Award of RSUs . On each annual Valuation Date, the
Company shall award RSUs to each participant as follows: Each
participant’s account shall be credited with a whole number
of RSUs determined by dividing the amount (expressed in dollars)
that is determined under his or her Subscription Agreement by the
Cost of each RSU awarded on such date. No fractional RSU will
be credited and the amount equivalent in value to the fractional
RSU will be paid out to the participant currently in cash.
V.
VESTING AND SETTLEMENT OF RSUs
A.
Vesting . A participant shall become vested in the
RSUs that are awarded in a year over a three-year vesting period in
which one-third of the RSUs shall vest on each anniversary of the
Valuation Date on which the RSUs were awarded as long as the
participant remains employed by the Company or a subsidiary on each
such anniversary date.
B.
Settlement After Vesting . With respect to each vested
RSU, the Company shall issue to the participant one share of Stock
within 30 days after the earliest of: (i) the end of the deferral
period specified in the participant’s Subscription Agreement
pertaining to such RSU; (ii) the date of the participant’s
termination of employment with the Company and its subsidiaries;
(iii) the date of the participant’s death; or (iv) the date
the participant becomes Disabled (as defined below).
For
purposes of this Plan, a participant shall be
“Disabled” if the participant (i) is unable to engage
in any substantial gainful activity by reason of any medically
determinabl
